EXHIBIT 3.1
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
ENBRIDGE ENERGY PARTNERS, L.P.
DATED AS OF OCTOBER 17, 2002
TABLE OF CONTENTS
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 Continuation.........................................................................2
1.2 Name.................................................................................2
1.3 Registered Office; Principal Office..................................................2
1.4 Power of Attorney....................................................................2
1.5 Term.................................................................................4
1.6 Possible Restrictions on Transfer....................................................4
ARTICLE II
DEFINITIONS
ARTICLE III
PURPOSE
3.1 Purpose and Business................................................................18
3.2 Powers..............................................................................18
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 Initial Contribution................................................................18
4.2 Intentionally Omitted...............................................................18
4.3 Intentionally Omitted...............................................................18
4.4 Issuances of Additional Units and Other Securities..................................18
4.5 Limited Preemptive Rights...........................................................20
4.6 Capital Accounts....................................................................20
4.7 Interest............................................................................23
4.8 No Withdrawal.......................................................................23
4.9 Loans from Partners.................................................................23
4.10 No Fractional Units.................................................................23
4.11 Splits and Combinations.............................................................23
4.12 I-Units.............................................................................24
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations for Capital Account Purposes............................................24
5.2 Allocations for Tax Purposes........................................................31
5.3 Requirement and Characterization of Distributions...................................33
5.4 Intentionally Omitted...............................................................34
5.5 Cash from Operations................................................................34
5.6 Change of Class A Common Units and Class B Common Units.............................35
5.7 Cash from Interim Capital Transactions..............................................35
5.8 Definitions.........................................................................36
5.9 Adjustment of Minimum Quarterly Distribution and Target Distribution Levels.........39
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5.10 Special Provisions Relating to I-Units..............................................40
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 Management..........................................................................42
6.2 Certificate of Limited Partnership..................................................44
6.3 Restrictions on General Partner's Authority.........................................44
6.4 Reimbursement of the General Partner................................................45
6.5 Outside Activities..................................................................46
6.6 Loans to and from the General Partner; Contracts with Affiliates....................46
6.7 Indemnification.....................................................................47
6.8 Liability of Indemnitees............................................................49
6.9 Resolution of Conflicts of Interest.................................................50
6.10 Other Matters Concerning the General Partner........................................51
6.11 Title to Partnership Assets.........................................................52
6.12 Purchase or Sale of Class A Common Units............................................52
6.13 Reliance by Third Parties...........................................................52
6.14 Registration Rights of the General Partner and its Affiliates.......................53
6.15 Delegation to EEM...................................................................55
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 Limitation of Liability.............................................................56
7.2 Management of Business..............................................................56
7.3 Outside Activities..................................................................56
7.4 Return of Capital...................................................................56
7.5 Rights of Limited Partners Relating to the Partnership..............................56
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 Records and Accounting..............................................................57
8.2 Fiscal Year.........................................................................58
8.3 Reports.............................................................................58
ARTICLE IX
TAX MATTERS
9.1 Preparation of Tax Returns..........................................................58
9.2 Tax Elections.......................................................................58
9.3 Tax Controversies...................................................................59
9.4 Organizational Expenses.............................................................59
9.5 Withholding.........................................................................59
9.6 Entity-Level Taxation...............................................................59
9.7 Entity-Level Deficiency Collections.................................................59
9.8 Opinions of Counsel.................................................................60
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ARTICLE X
CERTIFICATES
10.1 Certificates........................................................................60
10.2 Registration, Registration of Transfer and Exchange.................................60
10.3 Mutilated, Destroyed, Lost or Stolen Certificates...................................61
10.4 Record Holder.......................................................................62
ARTICLE XI
TRANSFER OF INTERESTS
11.1 Transfer............................................................................62
11.2 Transfer of General Partner's Partnership Interest..................................63
11.3 Transfer of Units...................................................................63
11.4 Restrictions on Transfers...........................................................64
11.5 Citizenship Certificates; Non-citizen Assignees.....................................64
11.6 Redemption of Interests.............................................................65
ARTICLE XII
ADMISSION OF PARTNERS
12.1 Intentionally Omitted...............................................................67
12.2 Admission of Substituted Limited Partners...........................................67
12.3 Admission of Successor General Partner..............................................67
12.4 Admission of Additional Limited Partners............................................68
12.5 Amendment of Agreement and Certificate of Limited Partnership.......................68
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 Withdrawal of the General Partner...................................................68
13.2 Removal of the General Partner......................................................70
13.3 Interest of Departing Partner and Successor General Partner.........................70
13.4 Intentionally Omitted...............................................................72
13.5 Withdrawal of Limited Partners......................................................72
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 Dissolution.........................................................................72
14.2 Continuation of the Business of the Partnership after Dissolution...................72
14.3 Liquidation.........................................................................73
14.4 Distributions in Kind...............................................................74
14.5 Cancellation of Certificate of Limited Partnership..................................74
14.6 Reasonable Time for Winding Up......................................................75
14.7 Return of Capital...................................................................75
14.8 Capital Account Restoration.........................................................75
14.9 Waiver of Partition.................................................................75
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ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 Amendment to be Adopted Solely by General Partner...................................75
15.2 Amendment Procedures................................................................76
15.3 Amendment Requirements..............................................................77
15.4 Meetings............................................................................78
15.5 Notice of a Meeting.................................................................78
15.6 Record Date.........................................................................78
15.7 Adjournment.........................................................................78
15.8 Waiver of Notice; Approval of Meeting; Approval of Minutes..........................78
15.9 Quorum..............................................................................79
15.10 Conduct of Meeting..................................................................79
15.11 Action Without a Meeting............................................................80
15.12 Voting and Other Rights.............................................................80
ARTICLE XVI
MERGER
16.1 Authority...........................................................................81
16.2 Procedure for Merger or Consolidation...............................................81
16.3 Approval by Limited Partners of Merger or Consolidation.............................82
16.4 Certificate of Merger...............................................................82
16.5 Effect of Merger....................................................................82
16.6 Merger with EEM upon Tax Status Event...............................................83
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 Right to Acquire Units..............................................................84
ARTICLE XVIII
GENERAL PROVISIONS
18.1 Addresses and Notices...............................................................86
18.2 Titles and Captions.................................................................87
18.3 Pronouns and Plurals................................................................87
18.4 Further Action......................................................................87
18.5 Binding Effect......................................................................87
18.6 Integration.........................................................................87
18.7 Creditors...........................................................................87
18.8 Waiver..............................................................................87
18.9 Counterparts........................................................................87
18.10 Applicable Law......................................................................88
18.11 Invalidity of Provisions............................................................88
18.12 Amendments to Reflect GP Reorganization Agreement...................................88
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THIRD AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
ENBRIDGE ENERGY PARTNERS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
ENBRIDGE ENERGY PARTNERS, L.P., dated as of October 17, 2002, is entered into by
and among Enbridge Energy Company, Inc., a
Delaware corporation, as the General
Partner, and the Limited Partners, together with any other Persons who become
Partners in the Partnership as provided herein.
WHEREAS, the General Partner and the other parties thereto entered into
that certain Agreement of Limited Partnership of the Partnership on December 19,
1991 (the "ORIGINAL AGREEMENT"); and
WHEREAS, the General Partner amended and restated the Original Agreement,
as evidenced by that certain Amended and Restated Agreement of Limited
Partnership of the Partnership dated as of December 27, 1991 (the "FIRST AMENDED
AND RESTATED AGREEMENT"); and
WHEREAS, the General Partner, acting pursuant to Section 15.1 of the First
Amended and Restated Agreement, amended and restated the First Amended and
Restated Agreement, as evidenced by that certain Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of April 15, 1997 (the
"SECOND AMENDED AND RESTATED AGREEMENT"); and
WHEREAS, the General Partner, acting pursuant to Section 15.1 of the Second
Amended and Restated Agreement, amended the Second Amended and Restated
Agreement, as evidenced by that certain Amendment to Amended and Restated
Agreement of Limited Partnership of the Partnership, dated as of August 28, 2001
(the "AMENDMENT AGREEMENT"); and
WHEREAS, pursuant to the authority granted to the General Partner in the
Second Amended and Restated Agreement, as amended, the General Partner desires
(i) to amend the Second Amended and Restated Agreement to create a class of
Units to be designated "I-Units," and to fix the preferences and relative,
participating, optional and other special rights, powers and duties pertaining
to the I-Units, (ii) to amend the Second Amended and Restated Agreement to
reflect the withdrawal of the General Partner as the general partner of Enbridge
Energy, Limited Partnership and the increase in the General Partner's general
partner interest in the Partnership as provided in the Reorganization Agreement,
(iii) to amend the Second Amended and Restated Agreement to reflect the
expiration of the Preference Period (as defined in the Second Amended and
Restated Agreement) and the inapplicability of various rights, preferences,
duties and obligations associated therewith, including the purchase and
redemption obligations and rights associated with APIs (as defined in the Second
Amended and Restated Agreement), and (iv) to restate the Second Amended and
Restated Agreement, as amended by the Amendment Agreement and the amendments
described in (i) through (iii) above; and
WHEREAS, Sections 4.4 and 15.1 of the Second Amended and Restated
Agreement, as amended, permit the General Partner, without the approval of any
Limited Partner or Assignee, to amend and restate the Second Amended and
Restated Agreement as provided herein;
NOW, THEREFORE, the General Partner does hereby amend and restate the
Second Amended and Restated Agreement, as amended, to provide, in its entirety,
as follows:
ARTICLE I
ORGANIZATIONAL MATTERS
1.1 CONTINUATION. The General Partner and the Limited Partners
hereby continue the Partnership as a limited partnership pursuant to the
provisions of the
Delaware Act. Except as expressly provided to the contrary in
this Agreement, the rights and obligations of the Partners and the
administration, dissolution and termination of the Partnership shall be governed
by the
Delaware Act. The Partnership Interest of each Partner shall be personal
property for all purposes.
1.2 NAME. The name of the Partnership shall be "Enbridge Energy
Partners, L.P." The Partnership's business may be conducted under any other name
or names deemed necessary or appropriate by the General Partner, including,
without limitation, the name of the General Partner or any Affiliate thereof.
The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters
shall be included in the Partnership's name where necessary for the purposes of
complying with the laws of any jurisdiction that so requires. The General
Partner in its sole discretion may change the name of the Partnership at any
time and from time to time and shall notify the Limited Partners of such change
in the next regular communication to Limited Partners.
1.3 REGISTERED OFFICE; PRINCIPAL OFFICE. Unless and until changed by
the General Partner, the registered office of the Partnership in the State of
Delaware shall be located at The Corporation Trust Center, 1209 Orange Street,
New Castle County, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the registered agent for
service of process on the Partnership in the State of
Delaware at such
registered office shall be The Corporation Trust Company. The principal office
of the Partnership and the address of the General Partner shall be ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or such other place as the General
Partner may from time to time designate by notice to the Limited Partners. The
Partnership may maintain offices at such other place or places within or outside
the State of
Delaware as the General Partner deems advisable.
1.4 POWER OF ATTORNEY. (a) Each Limited Partner and each Assignee
hereby constitutes and appoints each of the General Partner and, if a Liquidator
shall have been selected pursuant to Section 14.3, the Liquidator severally (and
any successor to either thereof by merger, transfer, assignment, election or
otherwise) and each of their authorized officers and attorneys-in-fact, with
full power of substitution, as his true and lawful agent and attorney-in-fact,
with full power and authority in his name, place and ▇▇▇▇▇, to:
(i) execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices (A) all certificates, documents and
other instruments (including, without limitation, this Agreement and
the Certificate of Limited Partnership and all amendments or
restatements thereof) that the General Partner or the Liquidator deems
necessary or appropriate to form, qualify or continue the existence or
qualification of the Partnership as a limited partnership (or a
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partnership in which the limited partners have limited liability) in
the State of
Delaware and in all other jurisdictions in which the
Partnership may conduct business or own property; (B) all
certificates, documents and other instruments that the General Partner
or the Liquidator deems necessary or appropriate to reflect, in
accordance with its terms, any amendment, change, modification or
restatement of this Agreement; (C) all certificates, documents and
other instruments (including, without limitation, conveyances and a
certificate of cancellation) that the General Partner or the
Liquidator deems necessary or appropriate to reflect the dissolution
and liquidation of the Partnership pursuant to the terms of this
Agreement; (D) all certificates, documents and other instruments
relating to the admission, withdrawal, removal or substitution of any
Partner pursuant to, or other events described in, Article XI, XII,
XIII or XIV or the Capital Contribution of any Partner; (E) all
certificates, documents and other instruments relating to the
determination of the rights, preferences and privileges of any class
or series of Units or other securities issued pursuant to Section 4.4;
and (F) all certificates, documents and other instruments (including,
without limitation, agreements and a certificate of merger) relating
to a merger or consolidation of the Partnership pursuant to Article
XVI; and
(ii) execute, swear to, acknowledge, deliver, file and record
all ballots, consents, approvals, waivers, certificates and other
instruments necessary or appropriate, in the sole discretion of the
General Partner or the Liquidator, to make, evidence, give, confirm or
ratify any vote, consent, approval, agreement or other action that is
made or given by the Partners hereunder or is consistent with the
terms of this Agreement or is necessary or appropriate, in the sole
discretion of the General Partner or the Liquidator, to effectuate the
terms or intent of this Agreement; PROVIDED, that when required by
Section 15.3 or any other provision of this Agreement that establishes
a percentage of the Limited Partners or of the Limited Partners of any
class or series required to take any action, the General Partner or
the Liquidator may exercise the power of attorney made in this Section
1.4(a)(ii) only after the necessary vote, consent or approval of the
Limited Partners or of the Limited Partners of such class or series.
Nothing contained in this Section 1.4 shall be construed as
authorizing the General Partner to amend this Agreement except in
accordance with Article XV, or as may be otherwise expressly provided
for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, and it shall survive and
not be affected by the subsequent death, incompetency, disability,
incapacity, dissolution, bankruptcy or termination of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited
Partner's or Assignee's Partnership Interest and shall extend to such
Limited Partner's or Assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or Assignee hereby agrees to be
bound by any representation made by the General Partner or the Liquidator
acting in good faith pursuant to such power of attorney; and each such
Limited Partner or Assignee hereby waives any and all defenses that may
3
be available to contest, negate or disaffirm the action of the General
Partner or the Liquidator taken in good faith under such power of attorney.
Each Limited Partner or Assignee shall execute and deliver to the General
Partner or the Liquidator, within 15 days after receipt of the General
Partner's or the Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator deems necessary to effectuate this Agreement and the purposes of
the Partnership.
1.5 TERM. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in accordance with the
Delaware Act and shall
continue in existence until the close of Partnership business on December 31,
2081 or until the earlier termination of the Partnership in accordance with the
provisions of Article XIV.
1.6 POSSIBLE RESTRICTIONS ON TRANSFER. Notwithstanding anything to
the contrary contained in this Agreement, in the event of (i) the enactment (or
imminent enactment) of any legislation, (ii) the publication of any temporary or
final regulation by the Treasury Department (a "TREASURY REGULATION"), (iii) any
ruling by the Internal Revenue Service or (iv) any judicial decision, that, in
any such case, in the Opinion of Counsel, would result in the taxation of the
Partnership for federal income tax purposes as a corporation or would otherwise
subject the Partnership to being taxed as an entity for federal income tax
purposes, then, either (a) the General Partner may impose such restrictions on
the transfer of Units or Partnership Interests as may be required, in the
Opinion of Counsel, to prevent the Partnership from being taxed as a corporation
or otherwise being taxed as an entity for federal income tax purposes,
including, without limitation, making any amendments to this Agreement as the
General Partner in its sole discretion may determine to be necessary or
appropriate to impose such restrictions; PROVIDED, that any such amendment to
this Agreement that would result in the delisting or suspension of trading of
the Units on any National Securities Exchange on which the Units are then traded
must be approved by the holders of at least 66 2/3% of the Outstanding Units
(excluding for this purpose any Common Units held by the General Partner and its
Affiliates and the number of I-Units that equal the number of Listed Shares and
Voting Shares held by the General Partner and its Affiliates) or (b) upon the
recommendation of the General Partner and the approval of the holders of at
least 66 2/3% of the Outstanding Units (excluding for this purpose any Common
Units held by the General Partner and its Affiliates and the number of I-Units
that equal the number of Listed Shares and Voting Shares held by the General
Partner and its Affiliates), the Partnership may be converted into and
reconstituted as a trust or any other type of legal entity (the "NEW ENTITY") in
the manner and on the terms so recommended and approved. In such event, the
business of the Partnership shall be continued by the New Entity and the Units
shall be converted into equity interests of the New Entity in the manner and on
the terms so recommended and approved. Notwithstanding the foregoing, no such
reconstitution shall take place unless the Partnership shall have received an
Opinion of Counsel to the effect that the liability of the Limited Partners for
the debts and obligations of the New Entity shall not, unless such Limited
Partners take part in the control of the business of the New Entity, exceed that
which otherwise had been applicable to such Limited Partners as limited partners
of the Partnership under the
Delaware Act.
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ARTICLE II
DEFINITIONS
The following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in this Agreement.
"ADDITIONAL LIMITED PARTNER" means a Person admitted to the Partnership as
a Limited Partner pursuant to Section 12.4 and who is shown as such on the books
and records of the Partnership.
"ADJUSTED CAPITAL ACCOUNT" means the Capital Account maintained for each
Partner as of the end of each taxable year of the Partnership, (a) increased by
any amounts that such Partner is obligated to restore under the standards set by
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (or is deemed obligated to
restore under Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), and
(b) decreased by (i) the amount of all losses and deductions that, as of the end
of such taxable year, are reasonably expected to be allocated to such Partner in
subsequent years under Sections 704(e)(2) and 706(d) of the Code and Treasury
Regulation Section 1.751-1(b)(2)(ii), and (ii) the amount of all distributions
that, as of the end of such taxable year, are reasonably expected to be made to
such Partner in subsequent years in accordance with the terms of this Agreement
or otherwise to the extent they exceed offsetting increases to such Partner's
Capital Account that are reasonably expected to occur during (or prior to) the
year in which such distributions are reasonably expected to be made (other than
increases as a result of a minimum gain chargeback pursuant to Section 5.1(e)(i)
or 5.1(e)(ii)). The foregoing definition of Adjusted Capital Account is intended
to comply with the provisions of Treasury Regulation Section 1.704-(b)(2)(ii)(d)
and shall be interpreted consistently therewith. The Adjusted Capital Account of
a Partner in respect of a Class A Common Unit, a Class B Common Unit, an I-Unit
or any other interest in the Partnership shall be the amount which such Adjusted
Capital Account would be if such Class A Common Unit, Class B Common Unit,
I-Unit or other interest in the Partnership was the only interest in the
Partnership held by a Partner.
"ADJUSTED PROPERTY" means any property the Carrying Value of which has been
adjusted pursuant to Section 4.6(d)(i) or 4.6(d)(ii).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, the Person in question. As used herein, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise. For purposes of this Agreement,
EEM is an Affiliate of the General Partner.
"AGREED ALLOCATION" means any allocation made pursuant to Section 5.1(a),
(b), (c), (d) or (f).
"AGREED VALUE" of any Contributed Property means the fair market value of
such property or other consideration at the time of contribution as determined
by the General Partner using such reasonable method of valuation as it may
adopt. The General Partner shall, in its sole
5
discretion, use such method as it deems reasonable and appropriate to allocate
the aggregate Agreed Value of Contributed Properties contributed to the
Partnership in a single or integrated transaction among such properties on a
basis proportional to their fair market value.
"AGREEMENT" means this Third Amended and Restated Agreement of Limited
Partnership of Enbridge Energy Partners, L.P., as it may be further amended,
supplemented or restated from time to time.
"AMENDMENT AGREEMENT" has the meaning assigned to such term in the recitals
to this Agreement.
"ASSIGNEE" means a Non-citizen Assignee or a Person to whom one or more
Units have been transferred in a manner permitted under this Agreement and who
has executed and delivered a Transfer Application as required by this Agreement,
but who has not become a Substituted Limited Partner.
"AVAILABLE CASH" has the meaning assigned to such term in Section 5.8(a).
"AVERAGE MARKET PRICE" has the meaning assigned to such term in Section
5.10(c).
"BOOK-TAX DISPARITY" means with respect to any item of Contributed Property
or Adjusted Property, as of the date of any determination, the difference
between the Carrying Value of such Contributed Property or Adjusted Property and
the adjusted basis thereof for federal income tax purposes as of such date. A
Partner's share of the Partnership's Book-Tax Disparities in all of its
Contributed Property and Adjusted Property will be reflected by the difference
between such Partner's Capital Account balance as maintained pursuant to Section
4.6 and the hypothetical balance of such Partner's Capital Account computed as
if it had been maintained strictly in accordance with federal income tax
accounting principles.
"BUSINESS DAY" means Monday through Friday of each week, except that a
legal holiday recognized as such by the government of the United States or
Canada or the State of New York or the Province of Alberta shall not be regarded
as a Business Day.
"CALCULATED UNIT AMOUNT" has the meaning assigned to such term in Section
5.10(c).
"CAPITAL ACCOUNT" means the capital account maintained for any Partner
pursuant to Section 4.6.
"CAPITAL CONTRIBUTION" means any cash, cash equivalents or the Net Agreed
Value of Contributed Property that a Partner has previously contributed to the
Partnership pursuant to the Prior Agreements or hereafter contributes to the
Partnership pursuant to Sections 4.4, 4.6(c) or 13.3(c).
"CARRYING VALUE" means (a) with respect to a Contributed Property, the
Agreed Value of such property reduced (but not below zero) by all depreciation,
amortization and cost recovery deductions charged to the Partners' Capital
Accounts, and (b) with respect to any other
6
Partnership property, the adjusted basis of such property for federal income tax
purposes, all as of the time of determination. The Carrying Value of any
property shall be adjusted from time to time in accordance with Sections
4.6(d)(i) and 4.6(d)(ii) and to reflect changes, additions or other adjustments
to the Carrying Value for dispositions and acquisitions of Partnership
properties, as deemed appropriate by the General Partner.
"CASH FROM INTERIM CAPITAL TRANSACTIONS" has the meaning assigned to such
term in Section 5.8(b).
"CASH FROM OPERATIONS" has the meaning assigned to such term in Section
5.8(c).
"CAUSE" means a court of competent jurisdiction has entered a final,
non-appealable judgment finding the General Partner liable for actual fraud,
gross negligence or willful or wanton misconduct in its capacity as general
partner of the Partnership.
"CERTIFICATE" means a certificate issued by the Partnership evidencing
ownership of one or more Partnership Interests.
"CERTIFICATE OF LIMITED PARTNERSHIP" means the Certificate of Limited
Partnership filed with the Secretary of State of the State of
Delaware as
referenced in Section 6.2, as such Certificate may be amended or restated from
time to time.
"CERTIFICATE OF MERGER" has the meaning assigned to such term in the LLC
Agreement.
"CITIZENSHIP CERTIFICATION" means a properly completed certificate in such
form as may be specified by the General Partner by which an Assignee or a
Limited Partner certifies that he (and if he is a nominee holding for the
account of another Person, that to the best of his knowledge such other Person)
is an Eligible Citizen.
"CLASS A COMMON UNIT" means, except as otherwise provided in Section
16.6(c), a Unit representing a fractional part of the Partnership Interests of
all Limited Partners and Assignees and having the rights and obligations
specified with respect to Class A Common Units in this Agreement.
"CLASS B COMMON UNIT" means a Unit representing a fractional part of the
Partnership Interests of the Limited Partners and Assignees and having the
rights and obligations specified with respect to Class B Common Units in this
Agreement.
"CLOSING DATE" means December 27, 1991.
"CLOSING PRICE" has the meaning assigned to such term in Section 17.1(b).
"CODE" means the Internal Revenue Code of 1986, as amended and in effect
from time to time, as interpreted by the applicable regulations thereunder. Any
reference herein to a specific section or sections of the Code shall be deemed
to include a reference to any corresponding provision of future law.
7
"COMMON UNIT" means, except as otherwise provided by Section 5.6, a Class A
Common Unit or a Class B Common Unit.
"COMPANY" means Enbridge Energy Company, Inc., a Delaware corporation.
"COMPANY SECURITIES" has the meaning assigned to such term in the LLC
Agreement.
"CONTRIBUTED PROPERTY" means each property or other asset, in such form as
may be permitted by the Delaware Act, but excluding cash, contributed to the
Partnership. Once the Carrying Value of a Contributed Property is adjusted
pursuant to Section 4.6(d), such property shall no longer constitute a
Contributed Property for purposes of Section 5.1, but shall be deemed an
Adjusted Property for such purposes.
"CONTRIBUTION AGREEMENT" means the Contribution Agreement, dated as of May
16, 2002, between the Company and the Partnership, as amended, supplemented or
restated from time to time.
"CONVEYANCE AGREEMENT" means the Contribution, Conveyance and Assumption
Agreement dated as of December 27, 1991, among the Company, the Partnership and
Enbridge Energy, Limited Partnership.
"CURRENT MARKET PRICE" has the meaning assigned to such term in Section
17.1(a).
"DELAWARE ACT" means the Delaware Revised Uniform Limited Partnership Act,
6 Del. C. Section 17-101, et. seq., as amended, supplemented or restated from
time to time, and any successor to such statute.
"DELEGATION OF CONTROL AGREEMENT" means the Delegation of Control
Agreement, dated as of October 17, 2002, among the Partnership, the Company and
EEM, as amended, supplemented or restated from time to time.
"DEPARTING INTEREST" has the meaning assigned to such term in Section
13.3(a).
"DEPARTING PARTNER" means a former general partner of the Partnership, from
and after the effective date of any withdrawal or removal of such former general
partner pursuant to Section 13.1 or Section 13.2.
"DISCRETIONARY ALLOCATION" shall mean any allocation of an item of income,
gain, deduction, or loss pursuant to the provisions of Section 5.1(d)(iii).
"ECONOMIC RISK OF LOSS" has the meaning set forth in Treasury Regulation
Section 1.752-2(a).
"EEM" means Enbridge Energy Management, L.L.C., a Delaware limited
liability company.
8
"ELIGIBLE CITIZEN" means a Person qualified to own interests in real
property in jurisdictions in which the Partnership or any Subsidiary does
business or proposes to do business from time to time, and whose status as a
Limited Partner or Assignee does not or would not subject the Partnership or any
Subsidiary to a substantial risk of cancellation or forfeiture of any of its
properties or any interest therein.
"ENBRIDGE INC." means Enbridge Inc., a Canadian corporation.
"EQUIVALENT NON-CASH AMOUNT" has the meaning assigned to such term in
Section 5.10(c).
"EVENT OF WITHDRAWAL" has the meaning assigned to such term in Section
13.1(a).
"EXCHANGE ACT" means the Securities Exchange Act of 1934 as amended,
supplemented or restated from time to time, and any successor to such statute.
"FIRST AMENDED AND RESTATED AGREEMENT" has the meaning assigned to such
term in the recitals to this Agreement.
"FIRST LIQUIDATION TARGET AMOUNT" has the meaning assigned to such term in
Section 5.1(c)(i)(D).
"FIRST TARGET DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(h).
"GENERAL PARTNER" means the Company, and its successors as general partner
of the Partnership.
"GENERAL PARTNER EQUITY VALUE" means, as of any date of determination, the
fair market value of the General Partner's Partnership Interest as a general
partner as determined by the General Partner using whatever reasonable method of
valuation it may adopt.
"GP REORGANIZATION AGREEMENT" means the Reorganization Agreement, dated as
of October 17, 2002, among the Partnership, the General Partner, Enbridge
Energy, Limited Partnership and Enbridge Pipelines (Lakehead) L.L.C.
"I-UNIT" means a Unit representing a fractional part of the Partnership
Interests of all Limited Partners and Assignees and having the rights and
obligations specified with respect to I-Units in this Agreement.
"INCENTIVE DISTRIBUTION" means any amount of cash distributed to the
General Partner, in its capacity as general partner of the Partnership, pursuant
to paragraph (b), (c) or (d) of Section 5.5 which exceeds an amount equal to
2.0% of the aggregate amount of cash then being distributed pursuant to such
provisions.
"INDEMNIFIED PERSON" has the meaning assigned to such term in Section
6.14(c).
9
"INDEMNITEE" means the General Partner, any Departing Partner, any Person
who is or was an Affiliate of the General Partner or any Departing Partner, any
Person who is or was an officer, director, employee, partner, agent or trustee
of the General Partner, any Departing Partner or any such Affiliate, or any
Person who is or was serving at the request of the General Partner, any
Departing Partner or any such Affiliate as a director, officer, employee,
partner, agent or trustee of another Person.
"INITIAL OFFERING" means the initial offering of Class A Common Units to
the public, as described in the Registration Statement.
"INITIAL UNIT PRICE" means $21.50.
"INTERIM CAPITAL TRANSACTION" has the meaning assigned to such term in
Section 5.8(i).
"ISSUE PRICE" means the price at which a Unit is purchased from the
Partnership, less any sales commission or underwriting discount charged to the
Partnership.
"LIMITED PARTNER" means each initial Limited Partner, each Substituted
Limited Partner, each Additional Limited Partner and any Departing Partner upon
the change of its status from General Partner to Limited Partner pursuant to
Section 13.3 and, solely for purposes of Articles IV, V and VI and Sections 14.3
and 14.4, shall include an Assignee.
"LIMITED PARTNER EQUITY VALUE" means, as of any date of determination, the
amount equal to the sum of (a) the product obtained by multiplying (i) the total
number of Class A Common Units Outstanding (immediately prior to an issuance of
Units or distribution of cash or Partnership property), by (ii)(A) in the case
of a valuation required by Section 4.6(d)(i) (other than valuations caused by
sales of a de minimis quantity of Units), the Issue Price or (B) in the case of
a valuation required by Section 4.6(d)(ii) (or a valuation required by Section
4.6(d)(i) caused by sales of a de minimis quantity of Units), the Closing Price
and (b) the fair market value of the Class B Common Units Outstanding
(immediately prior to an issuance of Units or distribution of cash or
Partnership property) as determined by the General Partner using whatever
reasonable method of valuation it may adopt.
"LIQUIDATOR" means the General Partner or other Person approved pursuant to
Section 14.3 who performs the functions described therein.
"LISTED SHARE" means a limited liability company interest in EEM designated
in the LLC Agreement as a "Listed Share."
"LLC AGREEMENT" means the Amended and Restated Limited Liability Company
Agreement of EEM dated as of October 17, 2002, including exhibits and annexes
thereto, as it may be amended, supplemented or restated from time to time.
"LPL CONTRIBUTION AGREEMENT" means the LPL Contribution and Assumption
Agreement dated as of December 27, 1991 among the Company, the Partnership and
Lakehead Services, Limited Partnership.
10
"MAXIMUM PERMITTED DELEGATION" has the meaning assigned to such term in the
Delegation of Control Agreement.
"MERGER AGREEMENT" has the meaning assigned to such term in Section 16.1;
PROVIDED, HOWEVER, that as used in Section 16.6, such term has the meaning
assigned to such term in the LLC Agreement.
"MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT" means that amount
determined in accordance with the principles of Treasury Regulation Section
1.704-2(i)(2).
"MINIMUM QUARTERLY DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(j).
"NATIONAL SECURITIES EXCHANGE" means an exchange registered with the
Securities and Exchange Commission under Section 6(a) of the Exchange Act.
"NET AGREED VALUE" means, (a) in the case of any Contributed Property, the
Agreed Value of such property reduced by any liabilities either assumed by the
Partnership upon such contribution or to which such property is subject when
contributed, and (b) in the case of any property distributed to a Partner or
Assignee by the Partnership, the Partnership's Carrying Value of such property
at the time such property is distributed, reduced by any indebtedness either
assumed by such Partner or Assignee upon such distribution or to which such
property is subject at the time of distribution as determined under Section 752
of the Code.
"NET INCOME" has the meaning assigned to such term in Section 5.8(k).
"NET LOSS" has the meaning assigned to such term in Section 5.8(l).
"NET TERMINATION GAIN" has the meaning assigned to such term in Section
5.8(m).
"NET TERMINATION LOSS" has the meaning assigned to such term in Section
5.8(n).
"NEW ENTITY" has the meaning assigned to such term in Section 1.6.
"NON-CITIZEN ASSIGNEE" means a Person who the General Partner has
determined in its sole discretion does not constitute an Eligible Citizen and as
to whose Partnership Interest the General Partner has become the Substituted
Limited Partner, pursuant to Section 11.5.
"NONRECOURSE BUILT-IN GAIN" means with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 5.2(b)(i)(A),
5.2(b)(ii)(A) or 5.2(b)(iii) if such properties were disposed of in a taxable
transaction in full satisfaction of such liabilities and for no other
consideration.
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"NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction or
expenditure (described in Section 705(a)(2)(B) of the Code) that, in accordance
with the principles of Treasury Regulation Section 1.704-2(b), are attributable
to a Nonrecourse Liability.
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury Regulation
Section 1.752-1(a)(2).
"NOTICE OF ELECTION TO PURCHASE" has the meaning assigned to such term in
Section 17.1(c).
"OMNIBUS AGREEMENT" means the Omnibus Agreement dated as of October 17,
2002, among Enbridge Inc., the Company and the Partnership, which specifies
certain business opportunities in which the Company or its Affiliates are
prohibited from engaging and which amends and restates the Distribution Support
Agreement, dated December 27, 1991, to delete the provisions therein relating to
distribution support, including the purchase and redemption of APIs (as defined
therein) and to reflect the reorganization of the Partnership as contemplated by
the GP Reorganization Agreement.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be regular
counsel to the Partnership or the General Partner) acceptable to the General
Partner.
"OPTIONAL PURCHASE PRICE" has the meaning assigned to such term in Section
17.1(a).
"ORIGINAL AGREEMENT" has the meaning assigned to such term in the recitals
to this Agreement.
"OUTSTANDING" means, with respect to the Units or other Partnership
Securities, as the case may be, all Units or other Partnership Securities, as
the case may be, that are issued by the Partnership and reflected as outstanding
on the Partnership's books and records as of the date of determination; PROVIDED
HOWEVER, that on any matter in this Agreement in respect of which Record Holders
of I-Units are entitled to vote, a number of I-Units equal to the number of
Listed Shares and Voting Shares that are not considered to be Outstanding (as
defined in the LLC Agreement) and the number of Listed Shares and Voting Shares
that are not otherwise entitled to vote on such matter under the LLC Agreement,
shall not be entitled to vote and shall not be considered to be Outstanding for
purposes of sending notices of a meeting of Record Holders of Outstanding Units
to vote (unless otherwise required by law), calculating required votes or
determining the presence of a quorum or for other similar purposes under this
Agreement with respect to such matter.
"PARTNER" means a General Partner or a Limited Partner and Assignees
thereof, if applicable.
"PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
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"PARTNER NONRECOURSE DEDUCTIONS" means any and all items of loss, deduction
or expenditure (including any expenditure described in Section 705(a)(2)(B) of
the Code) that, in accordance with the principles of Treasury Regulation Section
1.704-2(i)(1), are attributable to a Partner Nonrecourse Debt.
"PARTNERSHIP" means Enbridge Energy Partners, L.P., a Delaware limited
partnership heretofore formed and continued pursuant to this Agreement, and any
successor thereto.
"PARTNERSHIP ASSETS" means all assets of the Partnership and any
Subsidiary, whether tangible or intangible and whether real, personal or mixed,
including, without limitation, all ownership interests of the Partnership in any
Subsidiary.
"PARTNERSHIP INCEPTION" means the Closing Date.
"PARTNERSHIP INTEREST" means the interest of a Partner in the Partnership,
which, in the case of a Limited Partner or an Assignee, shall be expressed in
terms of Units or other Partnership Securities or a combination thereof, as the
case may be.
"PARTNERSHIP MINIMUM GAIN" means the amount determined pursuant to the
provisions of Treasury Regulation Section 1.704-2(d).
"PARTNERSHIP SECURITIES" has the meaning assigned to such term in Section
4.4(a).
"PARTNERSHIP YEAR" means the fiscal year of the Partnership, which shall be
the calendar year.
"PERCENTAGE INTEREST" means, as of the date of such determination, (a) as
to the General Partner, 2% and (b) as to any Limited Partner or Assignee holding
Units, the product of (i) 98% multiplied by (ii) the quotient of (x) the number
of Units, and fractions thereof, held by such Limited Partner or Assignee
divided by (y) the total number of all Units, and fractions thereof, then
Outstanding; PROVIDED, HOWEVER, that following any issuance of any new class of
Units or other equity securities by the Partnership in accordance with Section
4.4, proper adjustment shall be made to the Percentage Interest represented by
each Unit to reflect such issuance.
"PERSON" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
"PRIOR AGREEMENTS" means the Original Agreement, the First Amended and
Restated Agreement, the Second Amended and Restated Agreement and the Amendment
Agreement.
"PRO RATA" means (a) when modifying Units or any class thereof, apportioned
equally among all designated Units, and fractions thereof, and (b) when
modifying Partners and Assignees, apportioned among all designated Partners and
Assignees in accordance with their relative Percentage Interests.
13
"PURCHASE DATE" means the date determined by the General Partner, an
Affiliate of the General Partner or the Partnership, as the case may be, as the
date for purchase of all Outstanding Common Units (other than Units held by the
General Partner and its Affiliates) pursuant to Article XVII.
"PURCHASE PROVISIONS" means the purchase provisions that are attached to
the LLC Agreement as Annex A.
"PURCHASER" has the meaning assigned to such term in the Purchase
Provisions.
"RECAPTURE INCOME" means any gain recognized by the Partnership (computed
without regard to any adjustment required by Section 734 or 743 of the Code)
upon the disposition of any property or asset of the Partnership, which gain is
characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"RECORD DATE" means the date established by the General Partner for
determining (a) the identity of Limited Partners (or Assignees if applicable)
entitled to notice of, or to vote at, any meeting of Limited Partners or
entitled to vote by ballot or give approval of Partnership action in writing
without a meeting or entitled to exercise rights in respect of any lawful action
of Limited Partners, or (b) the identity of Record Holders entitled to receive
any report or distribution.
"RECORD HOLDER" means the Person in whose name a Unit is registered on the
books of the Transfer Agent as of the opening of business on a particular
Business Day; PROVIDED, HOWEVER, that when such term is used in relation to
Listed Shares or Voting Shares, such term shall have the meaning assigned to
such term in the LLC Agreement.
"REDEEMABLE UNITS" means any Units for which a redemption notice has been
given, and has not been withdrawn, under Section 11.6.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-1
(Registration No. 33-43425), as it may have been amended or supplemented from
time to time, filed by the Partnership with the Securities and Exchange
Commission under the Securities Act to register the initial public offering and
sale of Class A Common Units.
"REQUIRED ALLOCATIONS" means any allocation (or limitation imposed on any
allocation) of an item of income, gain, deduction or loss pursuant to (a) the
proviso-clause of Section 5.1(b)(i) or (b) Section 5.1(e), such allocations (or
limitations thereon) being directly or indirectly required by the Treasury
Regulations promulgated under Section 704(b) of the Code.
"RESIDUAL GAIN" or "RESIDUAL LOSS" means any item of gain or loss, as the
case may be, of the Partnership recognized for federal income tax purposes
resulting from a sale, exchange or other disposition of a Contributed Property
or Adjusted Property, to the extent such item of gain or loss is not allocated
pursuant to Section 5.2(b)(i)(A) or 5.2(b)(ii)(A), to eliminate Book-Tax
Disparities.
14
"SECOND AMENDED AND RESTATED AGREEMENT" has the meaning assigned to such
term in the recitals to this Agreement.
"SECOND TARGET DISTRIBUTION" has the meaning assigned to such term in
Section 5.8(o).
"SECURITIES ACT" means the Securities Act of 1933, as amended, supplemented
or restated from time to time, and any successor to such statute.
"SHARE DISTRIBUTION" has the meaning assigned to such term in the LLC
Agreement.
"SPECIAL EVENT" has the meaning assigned to such term in the Purchase
Provisions.
"SPECIAL PURCHASE EVENT" has the meaning assigned to such term in the
Purchase Provisions.
"SUBSIDIARY" means (a) a corporation of which more than 50% of the voting
power of shares entitled (without regard to the occurrence of any contingency)
to vote in the election of directors or other governing body of such corporation
is owned, directly or indirectly, at the date of determination, by the
Partnership, by one or more other Subsidiaries of the Partnership or a
combination thereof, (b) a partnership (whether general or limited) in which the
Partnership or another Subsidiary of the Partnership, is at the date of
determination, a general or limited partner of such partnership, but only if
more than 50% of the partnership interests of such partnership (considering all
of the partnership interests of the partnership as a single class) are owned,
directly or indirectly, at the date of determination, by the Partnership, by one
or more other Subsidiaries of the Partnership, or a combination thereof, or (c)
any other Person (other than a corporation or a partnership) in which the
Partnership, one or more other Subsidiaries of the Partnership, or a combination
thereof, directly or indirectly, at the date of determination, has (i) at least
a majority ownership interest or (ii) the power to elect or direct the election
of a majority of the directors or other governing body of such Person.
"SUBSIDIARY AGREEMENT" means the partnership agreement of any Subsidiary
that is a limited or general partnership, the limited liability company
agreement of any Subsidiary that is a limited liability company, the certificate
of incorporation and bylaws or similar organizational documents of any
Subsidiary that is a corporation, the joint venture agreement or similar
governing document of any Subsidiary that is a joint venture and the governing
or organizational or similar documents of any other Subsidiary that is a Person
other than a limited or general partnership, limited liability company,
corporation or joint venture, as such may be amended, supplemented or restated
from time to time.
"SUBSTITUTED LIMITED PARTNER" means a Person who is admitted as a Limited
Partner to the Partnership pursuant to Section 12.2 in place of and with all the
rights of a Limited Partner and who is shown as a Limited Partner on the books
and records of the Partnership.
"SURVIVING BUSINESS ENTITY" has the meaning assigned to such term in
Section 16.2(b).
"TAX STATUS EVENT" has the meaning assigned to such term in the LLC
Agreement.
15
"TRADING DAY" has the meaning assigned to such term in Section 17.1(b).
"TRANSFER AGENT" means such bank, trust company or other Person (including,
without limitation, the General Partner or one of its Affiliates) as shall be
appointed from time to time by the Partnership to act as registrar and transfer
agent for the Units.
"TRANSFER APPLICATION" means an application and agreement for transfer of
Units in the form set forth on the back of a Certificate or in a form
substantially to the same effect in a separate instrument.
"TRANSPORTATION SYSTEM" means any of the following assets and related
facilities that are owned or operated directly or indirectly by the Partnership
or any Subsidiary, as such assets and facilities may be maintained or improved
from time to time: (a) crude oil and natural gas liquids pipeline assets and
related facilities, (b) natural gas pipeline assets and related facilities, (c)
natural gas treating, processing and storage assets and related facilities and
(d) crude oil, natural gas liquids, natural gas and carbon dioxide trucking and
railcar assets and related facilities.
"TREASURY REGULATION" has the meaning assigned to such term in Section 1.6.
"UNDERWRITER" means each Person named as an underwriter in the Underwriting
Agreement who purchased Units pursuant thereto.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated December
19, 1991 among the Underwriters, the Partnership, the General Partner and
Enbridge Inc. providing for the purchase of Class A Common Units by such
Underwriters.
"UNIT" means a Partnership Interest of a Limited Partner or Assignee in the
Partnership representing a fractional part of the Partnership Interests of all
Limited Partners and Assignees and shall include, without limitation, Class A
Common Units, Class B Common Units and I-Units.
"UNITHOLDER" means a Person who is the holder of a Unit.
"UNREALIZED GAIN" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the fair market
value of such property as of such date over (b) the Carrying Value of such
property as of such date (prior to any adjustment to be made pursuant to Section
4.6(d) as of such date). In determining such Unrealized Gain, the aggregate cash
amount and fair market value of all Partnership Assets (including cash or cash
equivalents) shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; PROVIDED, HOWEVER, the General Partner, in
arriving at such valuation, must take fully into account the Limited Partner
Equity Value and the General Partner Equity Value at such time. In determining
the fair market value of the Partnership Assets, the General Partner shall treat
the amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
16
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
Partner shall allocate the aggregate value determined pursuant to the previous
two sentences among the assets of the Partnership (in such manner as it
determines in its sole discretion to be reasonable) to arrive at a fair market
value for individual properties.
"UNREALIZED LOSS" attributable to any item of Partnership property means,
as of any date of determination, the excess, if any, of (a) the Carrying Value
of such property as of such date (prior to any adjustment to be made pursuant to
Section 4.6(d) as of such date) over (b) the fair market value of such property
as of such date. In determining such Unrealized Loss, the aggregate cash amount
and fair market value of all Partnership Assets (including cash or cash
equivalents) shall be determined by the General Partner using such reasonable
method of valuation as it may adopt; PROVIDED, HOWEVER, the General Partner, in
arriving at such valuation, must take fully into account the Limited Partner
Equity Value and the General Partner Equity Value at such time. In determining
the fair market value of the Partnership Assets, the General Partner shall treat
the amount determined pursuant to paragraph (a) of the definition of Limited
Partner Equity Value as the fair market value of the Partnership assets that
would be distributed with respect to the Class A Common Units Outstanding
pursuant to Article XIV upon a hypothetical dissolution and liquidation of the
Partnership as of the relevant date of determination (assuming that all
Partnership indebtedness is paid pursuant to Section 14.3(a) prior to any
distributions to Partners pursuant to Sections 14.3(b) or 14.3(c)). The General
Partner shall allocate the aggregate value determined pursuant to the previous
two sentences among the assets of the Partnership (in such manner as it
determines in its sole discretion to be reasonable) to arrive at a fair market
value for individual properties.
"UNRECOVERED CAPITAL" means, at any time, with respect to a Unit, the
Unrecovered Initial Unit Price.
"UNRECOVERED INITIAL UNIT PRICE" means, at any time, with respect to any
Unit, the Initial Unit Price, less the sum of all distributions theretofore made
in respect of a Class A Common Unit issued in the Initial Offering constituting,
and which for purposes of determining the priority of such distribution is
treated as constituting, Cash from Interim Capital Transactions and of any
distributions of cash (or the Net Agreed Value of any distributions in kind) in
connection with the dissolution and liquidation of the Partnership theretofore
made in respect of a Class A Common Unit that was issued in the Initial
Offering.
"VOTING SHARE" has the meaning assigned to such term in the LLC Agreement.
"WITHDRAWAL OPINION OF COUNSEL" has the meaning assigned to such term in
Section 13.1(b).
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ARTICLE III
PURPOSE
3.1 PURPOSE AND BUSINESS. The purpose and nature of the business to
be conducted by the Partnership shall be (i) to serve as a partner in any
Subsidiary that is a partnership and, in connection therewith, to exercise all
of the rights and powers conferred upon the Partnership as a partner in any
Subsidiary that is a partnership pursuant to any Subsidiary Agreement or
otherwise, (ii) to serve as a member, shareholder or other equity interest
holder of any Subsidiary that is a limited liability company or corporation, and
in connection therewith, to exercise all of the rights and powers conferred upon
the Partnership as a member, shareholder or other equity interest holder of any
Subsidiary that is a limited liability company or corporation pursuant to any
Subsidiary Agreement or otherwise, (iii) to engage directly in, or to enter into
any partnership, joint venture or similar arrangement to engage in, any business
activity that may be lawfully conducted by a limited partnership organized
pursuant to the Delaware Act and, in connection therewith, to exercise all of
the rights and powers conferred upon the Partnership pursuant to the agreements
relating to such business activity, (iv) to do anything necessary or appropriate
to the foregoing (including, without limitation, the making of capital
contributions or loans to any Subsidiary or in connection with its involvement
in the activities referred to in clause (iii) of this sentence), and (v) to
engage in any other business activity as permitted under Delaware law.
3.2 POWERS. The Partnership shall be empowered to do any and all
acts and things necessary, appropriate, proper, advisable, incidental to or
convenient for the furtherance and accomplishment of the purposes and business
described in Section 3.1 and for the protection and benefit of the Partnership.
ARTICLE IV
CAPITAL CONTRIBUTIONS
4.1 INITIAL CONTRIBUTION. The initial Capital Contributions of the
General Partner and the initial Limited Partners were made in accordance with
Section 4.3 of the First Amended and Restated Agreement.
4.2 INTENTIONALLY OMITTED.
4.3 INTENTIONALLY OMITTED.
4.4 ISSUANCES OF ADDITIONAL UNITS AND OTHER SECURITIES.
(a) Subject to Section 4.4(c), the General Partner is hereby
authorized to cause the Partnership to issue, in addition to the Common
Units issued heretofore by the Partnership, such additional Units, or
classes or series thereof, or options, rights, warrants or appreciation
rights relating thereto, or any other type of equity security that the
Partnership may lawfully issue, or any unsecured or secured debt
obligations of the Partnership or debt obligations of the Partnership
convertible into any class or series of equity securities of the
Partnership (collectively, "PARTNERSHIP SECURITIES"), for any
18
Partnership purpose, at any time or from time to time, to the Partners or
to other Persons for such consideration and on such terms and conditions as
shall be established by the General Partner in its sole discretion, all
without the approval of any Limited Partners. The General Partner shall
have sole discretion, subject to the guidelines set forth in this Section
4.4 and the requirements of the Delaware Act, in determining the
consideration and terms and conditions with respect to any future issuance
of Partnership Securities.
(b) Notwithstanding any provision of this Agreement to the contrary,
additional Partnership Securities to be issued by the Partnership pursuant
to this Section 4.4 shall be issuable from time to time in one or more
classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other
special rights, powers and duties, including, without limitation, rights,
powers and duties senior to existing classes and series of Partnership
Securities, all as shall be fixed by the General Partner in the exercise of
its sole and complete discretion, subject to Delaware law, including,
without limitation, (i) the allocations of items of Partnership income,
gain, loss, deduction and credit to each such class or series of
Partnership Securities; (ii) the right of each such class or series of
Partnership Securities to share in Partnership distributions; (iii) the
rights of each such class or series of Partnership Securities upon
dissolution and liquidation of the Partnership; (iv) whether such class or
series of Partnership Securities is redeemable by the Partnership and, if
so, the price at which, and the terms and conditions upon which, such class
or series of Partnership Securities may be redeemed by the Partnership; (v)
whether such class or series of Partnership Securities is issued with the
privilege of conversion and, if so, the rate at which, and the terms and
conditions upon which, such class or series of Partnership Securities may
be converted into any other class or series of Partnership Securities; (vi)
the terms and conditions upon which each such class or series of
Partnership Securities will be issued, evidenced by Certificates and
assigned or transferred; and (vii) the right, if any, of each such class or
series of Partnership Securities to vote on Partnership matters, including,
without limitation, matters relating to the relative rights, preferences
and privileges of each such class or series.
(c) Upon the issuance of any Units by the Partnership (except upon
the issuance of I-Units or fractions of I-Units pursuant to Sections
5.10(b) and 5.10(e), the issuance of Units pursuant to Section 4.11, and
the change of Class A Common Units and Class B Common Units pursuant to
Section 5.6), the General Partner shall be required to make additional
Capital Contributions to the Partnership such that the General Partner
shall at all times have a balance in its Capital Account equal to 2% of the
total positive Capital Account balances of all Partners.
(d) The General Partner is hereby authorized and directed to take
all actions that it deems necessary or appropriate in connection with each
issuance of Units or other Partnership Securities pursuant to Section
4.4(a) and to amend this Agreement in any manner that it deems necessary or
appropriate to provide for each such issuance, to admit Additional Limited
Partners in connection therewith and to specify the relative rights,
19
powers and duties of the holders of the Units or other Partnership
Securities being so issued.
(e) Subject to the terms of Sections 4.4(c) and 6.4(c), the General
Partner is authorized to cause the issuance of Partnership Securities
(other than I-Units) pursuant to any employee benefit plan for the benefit
of employees responsible for the operations of the Partnership or any
Subsidiary maintained or sponsored by the General Partner, the Partnership,
any Subsidiary or any Affiliate of any of them.
(f) The General Partner shall do all things necessary to comply with
the Delaware Act and is authorized and directed to do all things it deems
to be necessary or advisable in connection with any future issuance of
Partnership Securities, including, without limitation, compliance with any
statute, rule, regulation or guideline of any federal, state or other
governmental agency or any National Securities Exchange on which the Units
or other Partnership Securities are listed for trading.
4.5 LIMITED PREEMPTIVE RIGHTS. Except as provided in Section 4.4(c),
no Person shall have any preemptive, preferential or other similar right with
respect to: (a) additional Capital Contributions; (b) issuance or sale of any
class or series of Units or other Partnership Securities, whether unissued, held
in the treasury or hereafter created; (c) issuance of any obligations, evidences
of indebtedness or other securities of the Partnership convertible into or
exchangeable for, or carrying or accompanied by any rights to receive, purchase
or subscribe to, any such Units or other Partnership Securities; (d) issuance of
any right of subscription to or right to receive, or any warrant or option for
the purchase of, any such Units or other Partnership Securities; or (e) issuance
or sale of any other securities that may be issued or sold by the Partnership.
4.6 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain for each Partner (or a beneficial
owner of Units held by a nominee in any case in which the nominee has
furnished the identity of such owner to the Partnership in accordance with
Section 6031(c) of the Code or any other method acceptable to the General
Partner in its sole discretion) a separate Capital Account in accordance
with the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). Such
Capital Account shall be increased by (i) the amount of all Capital
Contributions made by such Partner to the Partnership pursuant to this
Agreement and (ii) all items of Partnership income and gain (including,
without limitation, income and gain exempt from tax) computed in accordance
with Section 4.6(b) and allocated to such Partner pursuant to Section 5.1
and decreased by (x) the amount of cash or Net Agreed Value of all
distributions of cash or property made to such Partner pursuant to this
Agreement and (y) all items of Partnership deduction and loss computed in
accordance with Section 4.6(b) and allocated to such Partner pursuant to
Section 5.1.
(b) For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in the Partners' Capital Accounts,
the determination, recognition and classification of any such item shall be
the same as its determination,
20
recognition and classification for federal income tax purposes (including,
without limitation, any method of depreciation, cost recovery or
amortization used for that purpose), provided, that:
(i) Solely for purposes of this Section 4.6, the Partnership
shall be treated as owning directly its proportionate share (as
determined by the General Partner based upon the provisions of any
Subsidiary Agreement) of all property owned by any Subsidiary that is
not treated as a corporation for federal income tax purposes.
(ii) All fees and other expenses incurred by the Partnership
to promote the sale of (or to sell) a Partnership Interest that can
neither be deducted nor amortized under Section 709 of the Code, if
any, shall, for purposes of Capital Account maintenance, be treated as
an item of deduction at the time such fees and other expenses are
incurred and shall be allocated among the Partners pursuant to Section
5.1.
(iii) Except as otherwise provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any election
under Section 754 of the Code which may be made by the Partnership
and, as to those items described in Section 705(a)(1)(B) or
705(a)(2)(B) of the Code, without regard to the fact that such items
are not includable in gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(iv) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as if the
adjusted basis of such property as of such date of disposition were
equal in amount to the Partnership's Carrying Value with respect to
such property as of such date.
(v) In accordance with the requirements of Section 704(b) of
the Code, any deductions for depreciation, cost recovery or
amortization attributable to any Contributed Property shall be
determined as if the adjusted basis of such property on the date it
was acquired by the Partnership were equal to the Agreed Value of such
property. Upon an adjustment pursuant to Section 4.6(d) to the
Carrying Value of any Partnership property subject to depreciation,
cost recovery or amortization, any further deductions for such
depreciation, cost recovery or amortization attributable to such
property shall be determined (A) as if the adjusted basis of such
property were equal to the Carrying Value of such property immediately
following such adjustment and (B) using a rate of depreciation, cost
recovery or amortization derived from the same method and useful life
(or, if applicable, the remaining useful life) as is applied for
federal income tax purposes; PROVIDED, HOWEVER, that, if the asset has
a zero adjusted basis for federal income tax purposes, depreciation,
cost recovery or amortization deductions shall be determined using any
reasonable method that the General Partner may adopt.
21
(vi) If the Partnership's adjusted basis in depreciable or
cost recovery property is reduced for federal income tax purposes
pursuant to Sections 48(q)(1) or 48(q)(3) of the Code, the amount of
such reduction shall, solely for purposes hereof, be deemed to be an
additional depreciation or cost recovery deduction in the year such
property is placed in service and shall be allocated among the
Partners pursuant to Section 5.1. Any restoration of such basis
pursuant to Section 48(q)(2) of the Code shall to the extent possible,
be allocated in the year of such restoration as an item of income
pursuant to Section 5.1.
(c) A transferee of a Partnership Interest shall succeed to a pro
rata portion of the Capital Account of the transferor relating to the
Partnership Interest so transferred.
(d) (i) Consistent with the provisions of Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), on an issuance of additional Units for cash
or Contributed Property or the conversion of the General Partner's
Partnership Interest to Units pursuant to Section 13.3(b), the Capital
Accounts of all Partners (other than with respect to the I-Units) and the
Carrying Value of each Partnership property immediately prior to such
issuance shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership property, as if
such Unrealized Gain or Unrealized Loss had been recognized on an actual
sale of each such property immediately prior to such issuance and had been
allocated to the Partners at such time pursuant to Section 5.1 in the same
manner as any item of gain or loss actually recognized during such period
would have been allocated.
(ii) In accordance with Treasury Regulation Section
1.704-1(b)(2)(iv)(f), immediately prior to any distribution to a
Partner of any Partnership property (other than a distribution of cash
that is not in redemption or retirement of a Partnership Interest or
an increase in the number of Outstanding I-Units (or fractions
thereof) pursuant to Sections 5.10(b) and 5.10(e)), the Capital
Accounts of all Partners (other than with respect to the I-Units,
unless the distribution is pursuant to Section 14.3) and the Carrying
Value of each Partnership property shall be adjusted upward or
downward to reflect any Unrealized Gain or Unrealized Loss
attributable to such Partnership property, as if such Unrealized Gain
or Unrealized Loss had been recognized in a sale of such property
immediately prior to such distribution for an amount equal to its fair
market value, and had been allocated to the Partners, at such time,
pursuant to Section 5.1 in the same manner as any item of gain or loss
actually recognized during such period would have been allocated.
(iii) Upon an increase in the number of Outstanding I-Units (or
fractions thereof) pursuant to Sections 4.11, 5.10(b) or 5.10(e), the
Capital Accounts of all I-Units that are Outstanding prior to such
increase shall be divided equally among all I-Units that are
Outstanding after such increase (and any fractional I-Unit shall be
allocated a fractional part of such Capital Accounts).
22
4.7 INTEREST. No interest shall be paid by the Partnership on
Capital Contributions or on balances in Partners' Capital Accounts.
4.8 NO WITHDRAWAL. No Partner shall be entitled to withdraw any part
of its Capital Contributions or its Capital Account or to receive any
distribution from the Partnership, except as provided herein.
4.9 LOANS FROM PARTNERS. Loans by a Partner to the Partnership shall
not constitute Capital Contributions. If any Partner shall advance funds to the
Partnership in excess of the amounts required hereunder to be contributed by it
to the capital of the Partnership, the making of such excess advances shall not
result in any increase in the amount of the Capital Account of such Partner. The
amount of any such excess advances shall be a debt obligation of the Partnership
to such Partner and shall be payable or collectible only out of the Partnership
Assets in accordance with the terms and conditions upon which such advances are
made.
4.10 NO FRACTIONAL UNITS. Except with respect to I-Units, no
fractional Units shall be issued by the Partnership.
4.11 SPLITS AND COMBINATIONS.
(a) Subject to Sections 4.11(d) and 5.10(d), the General Partner may
make a Pro Rata distribution of Units or other Partnership Securities to
all Record Holders or may effect a subdivision or combination of Units or
other Partnership Securities; PROVIDED, HOWEVER, that, subject to Sections
4.11(d) and 5.10(d), after any such distribution, subdivision or
combination, each Partner shall have the same Percentage Interest in the
Partnership as before such distribution, subdivision or combination and,
except as provided in Section 4.6(d)(iii), the Capital Accounts of all such
classes of distributed, subdivided or combined Units or other Partnership
Securities Outstanding prior to such distribution, subdivision or
combination shall be divided equally (on a class by class basis) among all
such Units or other Partnership Securities Outstanding after such
distribution, subdivision or combination.
(b) Except with respect to subdivisions of Outstanding I-Units
pursuant to Section 5.10(b), whenever such a distribution, subdivision or
combination of Units or other Partnership Securities is declared, the
General Partner shall select a Record Date as of which the distribution,
subdivision or combination shall be effective and shall send notice of the
distribution, subdivision or combination at least 20 days prior to such
Record Date to each Record Holder as of a date not less than 10 days prior
to the date of such notice. The General Partner also may cause a firm of
independent public accountants selected by it to calculate the number of
Units to be held by each Record Holder after giving effect to such
distribution, subdivision or combination. The General Partner shall be
entitled to rely on any certificate provided by such firm as conclusive
evidence of the accuracy of such calculation.
(c) Promptly following any such distribution, subdivision or
combination, the General Partner may cause Certificates to be issued to the
Record Holders of Units as of
23
the applicable Record Date representing the new number of Units held by
such Record Holders, or the General Partner may adopt such other procedures
as it may deem appropriate to reflect such distribution, subdivision or
combination; PROVIDED, HOWEVER, if any such distribution, subdivision or
combination results in a smaller total number of Units Outstanding, the
General Partner shall require, as a condition to the delivery to a Record
Holder of such new Certificate, the surrender of any Certificate held by
such Record Holder immediately prior to such Record Date.
(d) Except with respect to I-Units, the Partnership shall not issue
fractional Units upon any distribution, subdivision or combination of
Units. If a distribution, subdivision or combination of Units would result
in the issuance of fractional Units but for the provision of Section 4.10
and this Section 4.11(d), each fractional Unit (other than a fractional
I-Unit) shall be rounded to the nearest whole Unit (and a 0.5 Unit shall be
rounded to the next higher Unit).
4.12 I-UNITS. Pursuant to Section 4.4, the General Partner hereby
designates and creates a special class of Units designated "I-UNITS" and fixes
the designations, preferences and relative, participating, optional or other
special rights, powers and duties of the holders of the I-Units as follows:
(a) Except as otherwise provided in Section 5.1(c), a holder of an
I-Unit will receive no allocations of income, gain, loss or deductions.
Except for distributions made in accordance with Sections 14.3(b) and
14.3(c), no distributions or payments shall be made to a holder of an
I-Unit except in additional I-Units (or fractions thereof) or a security
that has in all material respects the same rights and privileges as the
I-Units, in accordance with Section 5.10.
(b) The number of Outstanding I-Units may be subdivided pursuant to
Sections 4.11 and 5.10.
(c) Except as otherwise provided in this Agreement, each holder of
an I-Unit shall have the rights of a holder of a Common Unit with respect
to voting. Except as otherwise provided in this Agreement, all Units shall
vote or consent together as a single class on all matters submitted for a
vote or consent of the Outstanding Units.
ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 ALLOCATIONS FOR CAPITAL ACCOUNT PURPOSES. For purposes of
maintaining the Capital Accounts and in determining the rights of the Partners
among themselves, the Partnership's items of income, gain, loss and deduction
(computed in accordance with Section 4.6(b)) shall be allocated among the
Partners in each taxable year (or portion thereof) as provided herein below.
(a) NET INCOME. All items of income, gain, loss and deduction taken
into account in computing Net Income for such taxable period shall be
allocated in the same
24
manner as such Net Income is allocated hereunder, which Net Income shall be
allocated as follows:
(i) FIRST, 100% to the General Partner until the aggregate
Net Income allocated to the General Partner pursuant to this Section
5.1(a)(i) for the current taxable year and all previous taxable years
is equal to the aggregate Net Losses allocated to the General Partner
pursuant to Section 5.1(b)(ii) for all previous taxable years; and
(ii) SECOND, the balance, if any, 98% to the Limited Partners
holding Common Units, Pro Rata, and 2% to the General Partner.
(b) NET LOSSES. All items of income, gain, loss and deduction taken
into account in computing Net Losses for such taxable period shall be
allocated in the same manner as such Net Losses are allocated hereunder,
which Net Losses shall be allocated as follows:
(i) FIRST, 98% to the Limited Partners holding Common Units,
Pro Rata, and 2% to the General Partner; PROVIDED, that Net Losses
shall not be allocated pursuant to this Section 5.1(b)(i) to the
extent that such allocation would cause any Partner to have a deficit
balance in its Adjusted Capital Account at the end of such taxable
year (or increase any existing deficit balance in its Adjusted Capital
Account); and
(ii) SECOND, the balance, if any, 100% to the General Partner.
(c) NET TERMINATION GAINS AND LOSSES. After giving effect to the
special allocations set forth in Sections 5.1(d) and 5.1(e), all items of
income, gain, loss and deduction taken into account in computing Net
Termination Gain or Net Termination Loss for such taxable period shall be
allocated in the same manner as such Net Termination Gain or Net
Termination Loss is allocated hereunder. All allocations under this Section
5.1(c) shall be made after Capital Account balances have been adjusted by
all other allocations provided under this Section 5.1 and after all
distributions of Available Cash provided under Section 5.5 have been made
with respect to such taxable period.
(i) If a Net Termination Gain is recognized, such Net
Termination Gain shall be allocated between the General Partner and
the Limited Partners in the following manner (and the Adjusted Capital
Accounts of the Partners shall be increased by the amount so allocated
in each of the following subclauses, in the order listed, before an
allocation is made pursuant to the next succeeding subclause):
(A) FIRST, to each Partner having a deficit balance in its
Adjusted Capital Account, in the proportion that such deficit balance
bears to the total deficit balances in the Adjusted Capital Accounts
of all Partners, until each such
25
Partner has been allocated Net Termination Gain equal to any such
deficit balance in its Adjusted Capital Account;
(B) SECOND, if the Adjusted Capital Account of an I-Unit is
less than the Adjusted Capital Account of a Common Unit, 98% to the
Limited Partners holding I-Units or fractions thereof, Pro Rata, and
2% to the General Partner until the Adjusted Capital Account of each
I-Unit or fraction thereof, equals the Adjusted Capital Account of
each Common Unit, or comparable fraction thereof, or, if the Adjusted
Capital Account of an I-Unit is greater than the Adjusted Capital
Account of a Common Unit, 98% to the Limited Partners holding Common
Units, Pro Rata, and 2% to the General Partner until the Adjusted
Capital Account of each Common Unit equals the Adjusted Capital
Account of each I-Unit;
(C) THIRD, 98% to the Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 2% to the General
Partner, until each Limited Partner's Adjusted Capital Account
(determined on a per Unit basis) is equal to the sum of (aa) the
Unrecovered Capital plus (bb) any cumulative arrearages in the payment
of the Minimum Quarterly Distribution in respect of a Class A Common
Unit that was issued in the Initial Offering for any quarter
commencing after December 31, 1996;
(D) FOURTH, 85% to all Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 15% to the General
Partner until each such Limited Partner's Adjusted Capital Account in
respect of its Units or fractions thereof (determined on a per Unit
basis) is equal to the sum of (aa) the Unrecovered Capital, plus (bb)
any cumulative arrearages in the payment of the Minimum Quarterly
Distribution in respect of a Class A Common Unit that was issued in
the Initial Offering for any quarter commencing after December 31,
1996, plus (cc) the excess of the First Target Distribution over the
Minimum Quarterly Distribution for each quarter of the Partnership's
existence, less (dd) the amount per Unit of any distributions of
Available Cash that is deemed to be Cash from Operations that was
distributed pursuant to Section 5.5(b) (the sum of (bb) plus (cc) less
(dd) is hereinafter defined as the "FIRST LIQUIDATION TARGET AMOUNT");
(E) FIFTH, 75% to all Limited Partners holding I-Units, or
fractions thereof, and Common Units, Pro Rata, and 25% to the General
Partner until each such Limited Partner's Adjusted Capital Account in
respect of its Units or fractions thereof (determined on a per Unit
basis) is equal to the sum of (aa) the Unrecovered Capital, plus (bb)
the First Liquidation Target Amount, plus (cc) the excess of the
Second Target Distribution over the First Target Distribution for each
quarter of the Partnership's existence less (dd) the amount per Unit
of any distributions of Available Cash that is deemed to be Cash from
Operations distributed pursuant to Section 5.5(c); and
26
(F) SIXTH, the balance, if any, 50% to all Limited Partners
holding I-Units, or fractions thereof, and Common Units, Pro Rata, and
50% to the General Partner.
(ii) If a Net Termination Loss is recognized, such Net
Termination Loss shall be allocated to the Partners in the following
manner:
(A) FIRST, if the Adjusted Capital Account of an I-Unit, or
fraction thereof, is less than the Adjusted Capital Account of a
Common Unit, 98% to the Limited Partners holding Common Units, Pro
Rata, and 2% to the General Partner until the Adjusted Capital Account
of each Common Unit equals the Adjusted Capital Account of each I-Unit
or, if the Adjusted Capital Account of an I-Unit is greater than the
Adjusted Capital Account of a Common Unit, 98% to the Limited Partners
holding I-Units, or fractions thereof, Pro Rata, and 2% to the General
Partner until the Adjusted Capital Account of each I-Unit, or fraction
thereof, equals the Adjusted Capital Account of each Common Unit, or
comparable fraction thereof;
(B) SECOND, 100% to the General Partner and the Limited
Partners in proportion to, and to the extent of, the positive balances
in their respective Adjusted Capital Accounts until all such balances
are reduced to zero; and
(C) THIRD, the balance, if any, 100% to the General Partner.
(d) SPECIAL ALLOCATIONS. Notwithstanding any other provisions of
this Section 5.1 (other than Section 5.1(e)), the following special
allocations shall be made for such taxable period:
(i) PRIORITY ALLOCATIONS. (A) If the amount of cash or the
Net Agreed Value of any property distributed (except cash or property
distributed pursuant to Section 14.3 or 14.4) to any Limited Partner
holding Units during a taxable year is greater (on a per Unit basis)
than the amount of cash or the Net Agreed Value of property
distributed to the other Limited Partners holding Units other than
I-Units (on a per Unit basis), then (1) each Limited Partner holding
Units receiving such greater cash or property distribution shall be
allocated gross income in an amount equal to the product of (x) the
amount by which the distribution (on a per Unit basis) to such Limited
Partner holding Units exceeds the distribution (on a per Unit basis)
to the Limited Partners holding Units other than I-Units receiving the
smallest distribution and (y) the number of Units held by the Limited
Partner holding Units receiving the greater distribution; and (2) the
General Partner shall be allocated gross income in an amount equal to
2.04082% of the sum of the amounts allocated in clause (1) above.
(B) After the application of Section 5.1(d)(i)(A), all or a
portion of the remaining items of Partnership gross income or gain for
the taxable period, if any, shall be allocated 100% to the General
Partner (or its assignee) until the aggregate
27
amount of such items allocated to the General Partner (or its
assignee) pursuant to this paragraph (d)(i)(B) for the current taxable
period and all previous taxable periods is equal to the cumulative
amount of all Incentive Distributions made to the General Partner (or
its assignee) from the Closing Date to a date 45 days after the end of
the current taxable period.
(C) At the election of the General Partner with respect to
any taxable period, all or a portion of the remaining items of
Partnership gross income or gain for the taxable period, if any, shall
be allocated to each Partner holding Class B Common Units, in the
proportion that the respective number of Class B Common Units held by
such Partner bears to the total number of Class B Common Units then
outstanding, until such Partner has been allocated an amount of gross
income or gain which increases the Capital Account maintained with
respect to such Class B Common Units to an amount such that the
Capital Account attributable to each Class B Common Unit held by the
Partner, on a per Unit basis, is equal to the Capital Account, stated
on a per Unit basis, underlying any Class A Common Unit Outstanding at
the time of determination. The purpose of this allocation is to
establish uniformity between the Capital Accounts underlying Class B
Common Units and the Capital Accounts underlying Class A Common Units
immediately prior to the change of all Class A Common Units and Class
B Common Units into Common Units pursuant to Section 5.6.
(ii) NONRECOURSE LIABILITIES. For purposes of Treasury
Regulation Section 1.752-3(a)(3), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (A) the amount
of Partnership Minimum Gain and (B) the total amount of Nonrecourse
Built-in Gain shall be allocated among the General Partner and the
holders of Common Units in accordance with the allocation of Net
Income set forth in Section 5.1(a)(ii).
(iii) DISCRETIONARY ALLOCATION. (A) Notwithstanding any other
provision of Section 5.1(a), (b) or (c), the Agreed Allocations shall
be adjusted so that, to the extent possible, the net amount of items
of income, gain, loss and deduction allocated to each Partner pursuant
to the Required Allocations and the Agreed Allocations, together,
shall be equal to the net amount of such items that would have been
allocated to each such Partner under the Agreed Allocations had there
been no Required Allocations; PROVIDED, HOWEVER, that for purposes of
applying this Section 5.1(d)(iii)(A), it shall be assumed that all
chargebacks pursuant to Sections 5.1(e)(i) and (ii) have occurred.
(B) The General Partner shall have reasonable discretion,
with respect to each taxable year, to (1) apply the provisions of
Section 5.1(d)(iii)(A) in whatever fashion as is most likely to
minimize the economic distortions that might otherwise result from the
Required Allocations, and (2) divide all allocations pursuant to
Section 5.1(d)(iii)(A) among the Partners in a manner that is likely
to minimize such economic distortions.
28
(e) REQUIRED ALLOCATIONS. Notwithstanding any other provision of
this Section 5.1, the following special allocations shall be made for such
taxable period:
(i) PARTNERSHIP MINIMUM GAIN CHARGEBACK. Notwithstanding the
other provisions of this Section 5.1, if there is a net decrease in
Partnership Minimum Gain during any Partnership taxable period, each
Partner shall be allocated items of Partnership income and gain for
such period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(f)(6),
1.704-2(g)(2) and 1.704-2(j)(2)(i), or any successor provisions. For
purposes of this Section 5.1(e), each Partner's Adjusted Capital
Account balance shall be determined, and the allocation of income or
gain required hereunder shall be effected, prior to the application of
any other allocations pursuant to this Section 5.1 with respect to
such taxable period.
(ii) CHARGEBACK OF MINIMUM GAIN ATTRIBUTABLE TO PARTNER
NONRECOURSE DEBT. Notwithstanding the other provisions of this Section
5.1 (other than 5.1(e)(i)), except as provided in Treasury Regulation
Section 1.704-2(i)(4) if there is a net decrease in Minimum Gain
Attributable to Partner Nonrecourse Debt during any Partnership
taxable period, any Partner with a share of Minimum Gain Attributable
to Partner Nonrecourse Debt at the beginning of such taxable period
shall be allocated items of Partnership income and gain for such
period (and, if necessary, subsequent periods) in the manner and
amounts provided in Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(j)(ii), or any successor provisions. For purposes of this
Section 5.1, each Partner's Adjusted Capital Account balance shall be
determined and the allocation of income or gain required hereunder
shall be effected, prior to the application of any other allocations
pursuant to this Section 5.1(e), other than Section 5.1(e)(i), with
respect to such taxable period.
(iii) QUALIFIED INCOME OFFSET. In the event any Limited Partner
unexpectedly receives adjustments, allocations or distributions
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of
Partnership income and gain shall be specifically allocated to such
Partner in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations promulgated under Section 704(b)
of the Code, the deficit balance, if any, in its Adjusted Capital
Account created by such adjustments, allocations or distributions as
quickly as possible unless such deficit balance is otherwise
eliminated pursuant to Section 5.1(e)(i) or 5.1(e)(ii).
(iv) GROSS INCOME ALLOCATIONS. In the event any Partner has a
deficit balance in its Adjusted Capital Account at the end of any
Partnership taxable period, that is in excess of the sum of (A) the
amount such Partner is obligated to restore and (B) the amount such
Partner is deemed to be obligated to restore pursuant to Treasury
Regulation Sections 1.704-2(g) and 1.704-2(i)(5), such Partner shall
be specially allocated items of Partnership gross income and gain in
the amount of such excess as quickly as possible; provided, that an
allocation
29
pursuant to this Section 5.1(e)(iv) shall be made only if and to the
extent that such Partner would have a deficit balance in its Adjusted
Capital Account after all other allocations provided in this Section
5.1 have been tentatively made as if this Section 5.1(e)(iv) was not
in this Agreement.
(v) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
taxable period shall be allocated to the Partners in accordance with
their respective Percentage Interests. If the General Partner
determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to
satisfy the safe harbor requirements of the Treasury Regulations
promulgated under Section 704(b) of the Code, the General Partner is
authorized, upon notice to the Limited Partners, to revise the
prescribed ratio to the numerically closest ratio which does satisfy
such requirements.
(vi) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated 100% to the
Partner that bears the Economic Risk of Loss for such Partnership
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section
1.704-2(i). If more than one Partner bears the Economic Risk of Loss
with respect to a Partner Nonrecourse Debt, such Partner Nonrecourse
Deductions attributable thereto shall be allocated between or among
such Partners in accordance with the ratios in which they share such
Economic Risk of Loss.
(f) The Limited Partners holding Class A Common Units will be
allocated gross income during each taxable year of the Partnership that
would otherwise be allocated to the Limited Partners holding Class B Common
Units pursuant to this Agreement (other than Section 5.1(e)), to the extent
such an amount of gross income exists, in accordance with the following
schedule:
YEAR AMOUNT
---- ------
1995............................ $ 9 million
1996............................ 9 million
1997............................ 9 million
1998............................ 11 million
1999............................ 11 million
2000............................ 13 million
2001............................ 13 million
2002............................ 15 million
2003............................ 15 million
2004............................ 17 million
2005............................ 17 million
2006............................ 19 million
2007............................ 19 million
2008............................ 21 million
2009............................ 21 million
30
YEAR AMOUNT
---- ------
2010............................ 23 million
2011............................ 23 million
2012............................ 25 million
Thereafter...................... 25 million
Notwithstanding the above, no allocation of gross income shall be made pursuant
to this Section 5.1(f) (or the amount of such allocation shall be reduced) in
any taxable year of the Partnership to the extent that a purchaser of a Class A
Common Unit in the offering made pursuant to the Registration Statement would be
allocated, pursuant to this Agreement, an amount of federal taxable income with
respect to such taxable year that would exceed 65% of the amount of Available
Cash distributed to such a Unitholder with respect to that taxable year. In
addition, no allocation of gross income shall be made pursuant to this Section
5.1(f) for any taxable year including or following the change of all Class A
Common Units and Class B Common Units into Common Units pursuant to Section 5.6.
5.2 ALLOCATIONS FOR TAX PURPOSES.
(a) Except as otherwise provided herein, for federal income tax
purposes, each item of income, gain, loss and deduction which is recognized
by the Partnership for federal income tax purposes shall be allocated among
the Partners in the same manner as its correlative item of "book" income,
gain, loss or deduction is allocated pursuant to Section 5.1.
(b) In an attempt to eliminate Book-Tax Disparities attributable to
a Contributed Property or Adjusted Property, items of income, gain, loss,
depreciation, amortization and cost recovery deductions shall be allocated
for federal income tax purposes among the Partners as follows:
(i) (A) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the Partners in the
manner provided under Section 704(c) of the Code that takes into
account the variation between the Agreed Value of such property and
its adjusted basis at the time of contribution; and (B) except as
otherwise provided in Section 5.2(b)(iii), any item of Residual Gain
or Residual Loss attributable to a Contributed Property shall be
allocated among the Partners in the same manner as its correlative
item of "book" gain or loss is allocated pursuant to Section 5.1.
(ii) (A) In the case of an Adjusted Property, such items shall
(1) first, be allocated among the Partners in a manner consistent with
the principles of Section 704(c) of the Code to take into account the
Unrealized Gain or Unrealized Loss attributable to such property and
the allocations thereof pursuant to Section 4.6(d)(i) or (ii), and (2)
second, in the event such property was originally a Contributed
Property, be allocated among the Partners in a manner consistent with
Section 5.2(b)(i)(A); and (B) except as otherwise provided in Section
5.2(b)(iii),
31
any item of Residual Gain or Residual Loss attributable to an Adjusted
Property shall be allocated among the Partners in the same manner as
its correlative item of "book" gain or loss is allocated pursuant to
Section 5.1.
(iii) Any items of income, gain, loss or deduction otherwise
allocable under Section 5.2(b)(i)(B) or 5.2(b)(ii)(B) shall be subject
to allocation by the General Partner in a manner designed to
eliminate, to the maximum extent possible, Book-Tax Disparities in a
Contributed Property or Adjusted Property otherwise resulting from the
application of the "ceiling" limitation (under Section 704(c) of the
Code or Section 704(c) principles) to the allocations provided under
Section 5.2(b)(i)(A) or 5.2(b)(ii)(A); PROVIDED, HOWEVER, that unless
the General Partner elects to do so, the Partnership shall not
amortize any goodwill or other Section 197 asset which is a
Contributed Property and which was not an amortizable Section 197
asset in the hands of the contributor of such asset.
(c) For the proper administration of the Partnership or for the
preservation of uniformity of the Units (or any class or classes thereof),
the General Partner shall have sole discretion to (i) adopt such
conventions as it deems appropriate in determining the amount of
depreciation, amortization and cost recovery deductions; (ii) make special
allocations for federal income tax purposes of income (including, without
limitation, gross income) or deductions; and (iii) amend the provisions of
this Agreement as appropriate (x) to reflect the proposal or promulgation
of Treasury Regulations under Section 704(b) or Section 704(c) of the Code
or (y) otherwise to preserve or achieve uniformity of the Units (or any
class or classes thereof). The General Partner may adopt such conventions,
make such allocations and make such amendments to this Agreement as
provided in this Section 5.2(c) only if such conventions, allocations or
amendments would not have a material adverse effect on the Partners, the
holders of any class or classes of Units issued and Outstanding of the
Partnership, and if such allocations are consistent with the principles of
Section 704 of the Code.
(d) The General Partner in its sole discretion may determine to
depreciate the portion of an adjustment under Section 743(b) of the Code
attributable to unrealized appreciation in any Adjusted Property (to the
extent of the unamortized Book-Tax Disparity) using a predetermined rate
derived from the depreciation method and useful life applied to the
Partnership's common basis of such property, despite the inconsistency of
such approach with Treasury Regulation Section 1.167(c)-1(a)(6). If the
General Partner determines that such reporting position cannot reasonably
be taken, the General Partner may adopt a depreciation convention under
which all purchasers acquiring Units in the same month would receive
depreciation, based upon the same applicable rate as if they had purchased
a direct interest in the Partnership's property. If the General Partner
chooses not to utilize such aggregate method, the General Partner may use
any other reasonable depreciation convention to preserve the uniformity of
the intrinsic tax characteristics of any Units that would not have a
material adverse effect on the Limited Partners or the Record Holders of
any class or classes of Units. In addition, for purposes of computing the
adjustments under Section 743(b) of the Code, the General Partner shall
32
be authorized (but not required) to adopt a convention whereby the price
paid by a transferee of Units will be deemed to be the lowest quoted
trading price of the Units on any National Securities Exchange on which
such Units are traded during the calendar month in which such transfer is
deemed to occur pursuant to Section 5.2(g) without regard to the actual
price paid by such transferee.
(e) Any gain allocated to the Partners upon the sale or other
taxable disposition of any Partnership asset shall, to the extent possible,
after taking into account other required allocations of gain pursuant to
this Section 5.2 be characterized as Recapture Income in the same
proportions and to the same extent as such Partners (or their predecessors
in interest) have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture Income.
(f) All items of income, gain, loss, deduction and credit recognized
by the Partnership for federal income tax purposes and allocated to the
Partners in accordance with the provisions hereof shall be determined
without regard to any election under Section 754 of the Code which may be
made by the Partnership; PROVIDED, HOWEVER, that such allocations, once
made, shall be adjusted as necessary or appropriate to take into account
those adjustments permitted or required by Sections 734 and 743 of the
Code.
(g) Each item of Partnership income, gain, loss and deduction
attributable to a transferred Partnership Interest of the General Partner
or to transferred Units shall, for federal income tax purposes, be
determined on an annual basis and prorated on a monthly basis and shall be
allocated to the Partners as of the close of the New York Stock Exchange on
the last day of the preceding month; PROVIDED, HOWEVER, that gain or loss
on a sale or other disposition of any assets of the Partnership other than
in the ordinary course of business shall be allocated to the Partners as of
the opening of the New York Stock Exchange on the first Business Day of the
month in which such gain or loss is recognized for federal income tax
purposes. The General Partner may revise, alter or otherwise modify such
methods of allocation as it determines necessary, to the extent permitted
or required by Section 706 of the Code and the regulations or rulings
promulgated thereunder.
(h) Allocations that would otherwise be made to a Limited Partner
under the provisions of this Article V shall instead be made to the
beneficial owner of Units held by a nominee in any case in which the
nominee has furnished the identity of such owner to the Partnership in
accordance with Section 6031(c) of the Code or any other method acceptable
to the General Partner in its sole discretion.
5.3 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS.
(a) Within 45 days following the end of each calendar quarter the
Partnership shall distribute to the Partners and retain for reinvestment in
its business in accordance with this Article V, an amount equal to 100% of
Available Cash with respect to such quarter. Distributions of Available
Cash by the Partnership to the Partners shall be made as of the Record Date
selected by the General Partner in its reasonable discretion. All
33
amounts of Available Cash distributed and retained by the Partnership on
any date from any source shall be deemed to be Cash from Operations until
the sum of all amounts of Available Cash theretofore distributed by the
Partnership to the Partners pursuant to Section 5.4 of the Second Amended
and Restated Agreement or any substantially similar provisions of any other
Prior Agreements and Section 5.5 and retained by the Partnership pursuant
to Section 5.5 equals the aggregate amount of all Cash from Operations of
the Partnership from the Partnership Inception through the end of the
calendar quarter immediately preceding such distribution and retention. Any
remaining amounts of Available Cash distributed and retained by the
Partnership on such date shall be deemed to be Cash from Interim Capital
Transactions.
(b) Notwithstanding the definitions of Available Cash and Cash from
Operations contained herein, disbursements (including, without limitation,
contributions to any Subsidiary or disbursements on behalf of any
Subsidiary) made or cash reserves established after the end of any quarter
shall be deemed to have been made or established, for purposes of
determining Available Cash and Cash from Operations, within such quarter if
the General Partner so determines. Notwithstanding the foregoing, in the
event of the dissolution and liquidation of the Partnership, all proceeds
of such liquidation shall be applied and distributed in accordance with,
and subject to the terms and conditions of, Sections 14.3 and 14.4.
5.4 INTENTIONALLY OMITTED.
5.5 CASH FROM OPERATIONS. Available Cash with respect to any
calendar quarter that is deemed to be Cash from Operations pursuant to the
provisions of Section 5.3 or 5.7 shall be distributed to the Partners or
retained by the Partnership as follows:
(a) First, 98% in respect of the Units, Pro Rata, and 2% in respect
of the General Partner's Partnership Interest until the Partnership has
distributed or retained in respect of each Unit then Outstanding an amount
of cash equal to the Minimum Quarterly Distribution;
(b) Second, 85% in respect of the Units, Pro Rata, and 15% in
respect of the General Partner's Partnership Interest until the Partnership
has distributed or retained in respect of each Unit then Outstanding an
amount of cash equal to the excess of the First Target Distribution over
the Minimum Quarterly Distribution;
(c) Third, 75% in respect of the Units, Pro Rata, and 25% in respect
of the General Partner's Partnership Interest until the Partnership has
distributed or retained in respect of each Unit then Outstanding an amount
of cash equal to the excess of the Second Target Distribution over the
First Target Distribution; and
(d) Fourth, 50% in respect of the Units, Pro Rata, and 50% in
respect of the General Partner's Partnership Interest;
34
PROVIDED, HOWEVER, that if the Minimum Quarterly Distribution, the First Target
Distribution and the Second Target Distribution have been reduced to zero
pursuant to Section 5.9(a)(ii), then Available Cash that is deemed to be Cash
from Operations with respect to any quarter will be distributed or retained 98%
in respect of the Class A Common Units and the I-Units, Pro Rata, and 2% in
respect of the General Partner's Partnership Interest until there has been
distributed in respect of each Class A Common Unit issued in the Initial
Offering and then Outstanding, pursuant to Section 5.4 of the Second Amended and
Restated Agreement or any substantially similar provisions of any other Prior
Agreements and this Section 5.5 including this proviso, Available Cash that is
deemed to be Cash from Operations since Partnership Inception equal to the
Minimum Quarterly Distribution (as from time to time adjusted) for all periods
since Partnership Inception, and thereafter in accordance with Section 5.5(d).
The foregoing amounts of Available Cash shall be distributed by the
Partnership in respect of the Common Units and retained by the Partnership in
respect of the I-Units. The foregoing amounts of Available Cash shall be
distributed by the Partnership in respect of the General Partner's Partnership
Interest, except that the Partnership shall retain out of such amounts an amount
equal to 2% of the quotient obtained by dividing (i) the Available Cash retained
by the Partnership in respect of the I-Units pursuant to this Section 5.5 by
(ii) 98%.
5.6 CHANGE OF CLASS A COMMON UNITS AND CLASS B COMMON UNITS. At such
time as the General Partner determines, based on advice of counsel, that all
Class B Common Units have, as a substantive matter, like intrinsic economic and
federal income tax characteristics, in all material respects, to the intrinsic
economic and federal income tax characteristics of the Class A Common Units then
Outstanding, all differences and distinctions between Class A Common Units and
Class B Common Units shall automatically cease and all Class A Common Units and
Class B Common Units shall thereafter be one class of Units called "Common
Units."
5.7 CASH FROM INTERIM CAPITAL TRANSACTIONS. Available Cash that is
deemed to be Cash from Interim Capital Transactions shall be distributed to the
Partners or retained by the Partnership, unless the provisions of Section 5.3
require otherwise, as follows:
(a) 98% in respect of the Units, Pro Rata, and 2% in respect of the
General Partner's Partnership Interest until a hypothetical holder of a
Class A Common Unit acquired at the time of the Initial Offering has
received with respect to each Class A Common Unit, from Partnership
Inception through such date, distributions of Available Cash that are
deemed to be Cash from Interim Capital Transactions in an aggregate amount
per Class A Common Unit equal to the Initial Unit Price; and
(b) thereafter, all Available Cash shall be distributed or retained
as if it were Cash from Operations and shall be distributed or retained in
accordance with Section 5.5.
The foregoing amounts of Available Cash shall be distributed by the
Partnership in respect of the Common Units and retained by the Partnership
in respect of the I-Units. The foregoing amounts of Available Cash shall be
distributed by the Partnership in respect of the General Partner's
Partnership Interest, except that the Partnership shall
35
retain out of such amounts an amount equal to 2% of the quotient obtained
by dividing (i) the Available Cash retained by the Partnership in respect
of the I-Units pursuant to this Section 5.7 by (ii) 98%.
5.8 DEFINITIONS. As used herein,
(a) "AVAILABLE CASH" means, with respect to any calendar quarter,
(i) the sum of (A) all cash receipts of the Partnership during such quarter
from all sources (including, without limitation, distributions of any
Subsidiary's "Available Cash" (as that term is defined in the respective
Subsidiary Agreement) received by the Partnership pursuant to the
respective Subsidiary Agreement) and (B) any reduction in cash reserves
established in prior quarters (either by reversal or utilization), less
(ii) the sum of (aa) all cash disbursements of the Partnership during such
quarter, and (bb) any cash reserves established in such quarter in such
amounts as the General Partner determines to be necessary or appropriate in
its reasonable discretion (x) to provide for the proper conduct of the
business of the Partnership (including reserves for possible rate refunds
or future capital expenditures) or (y) to provide funds for distributions
with respect to any of the next four calendar quarters and (cc) any other
cash reserves established in such quarter in such amounts as the General
Partner determines in its reasonable discretion to be necessary because the
distribution of such amounts would be prohibited by applicable law or by
any loan agreement, security agreement, mortgage, debt instrument or other
agreement or obligation to which the Partnership is a party or by which it
is bound or its assets are subject. Taxes paid by the Partnership on behalf
of, or amounts withheld with respect to, all or less than all of the
Partners (not including taxes reimbursed pursuant to Section 3.07(b) of the
Delegation of Control Agreement) shall not be considered cash disbursements
of the Partnership which reduce Available Cash, but the payment or
withholding thereof shall be deemed to be a distribution of Available Cash
to such Partners. Alternatively, in the discretion of the General Partner,
such taxes (if pertaining to all Partners) may be considered to be cash
disbursements of the Partnership which reduce Available Cash, but the
payment or withholding thereof shall not be deemed to be a distribution of
Available Cash to such Partners. Notwithstanding the foregoing, Available
Cash shall not include any cash receipts or reductions in reserves or take
into account any disbursements made or reserves established after
commencement of the dissolution and liquidation of the Partnership. For
purposes of determining "Available Cash," the aggregate amount of Available
Cash that is retained by the Partnership pursuant to Sections 5.5 and 5.7
with respect to any calendar quarter will be disregarded for purposes of
determining "Available Cash" in future quarters.
(b) "CASH FROM INTERIM CAPITAL TRANSACTIONS" means, at any date,
such amounts of Available Cash as are deemed to be Cash from Interim
Capital Transactions pursuant to Section 5.3.
(c) "CASH FROM OPERATIONS" means, at any date but prior to
commencement of the dissolution and liquidation of the Partnership, on a
cumulative basis, the cash balance of the Partnership and any Subsidiary at
Partnership Inception, excluding any such cash
36
proceeds to the Partnership from the exercise of the Underwriters'
over-allotment option granted in the Underwriting Agreement, plus all cash
receipts of the Partnership and any Subsidiary from their operations
(excluding any cash proceeds from any Interim Capital Transactions) during
the period since the Partnership Inception through such date less the sum
of (i) all cash operating expenditures of the Partnership and any
Subsidiary during such period, including, without limitation, taxes imposed
on the Partnership or any Subsidiary as an entity, (ii) all cash debt
service payments of the Partnership and any Subsidiary during such period
(other than payments or prepayments of principal and premium required by
reason of loan agreements (including covenants and default provisions
therein) or by lenders, in each case in connection with sales or other
dispositions of assets or made in connection with refinancings or
refundings of indebtedness; PROVIDED, that any payment or prepayment of
principal, whether or not then due, shall be determined at the election and
in the discretion of the General Partner to be refunded or refinanced by
any indebtedness incurred or to be incurred by the Partnership or any
Subsidiary simultaneously with or within 180 days prior to or after such
payment or prepayment to the extent of the principal amount of such
indebtedness so incurred), (iii) all cash capital expenditures of the
Partnership and any Subsidiary during such period necessary to maintain the
service capability of the Transportation System, (iv) an amount equal to
the incremental revenues collected pursuant to a rate increase that are, at
such date, subject to possible refund and for which the General Partner has
established a cash reserve, (v) any cash reserves outstanding as of such
date which the General Partner determines in its reasonable discretion to
be necessary or appropriate to provide for the future cash payment of items
of the type referred to in clauses (i) through (iii) of this sentence and
(vi) any cash reserves outstanding as of such date that the General Partner
determines to be necessary or appropriate in its reasonable discretion to
provide funds for distributions with respect to any one or more of the next
four calendar quarters, all as determined on a consolidated basis and after
elimination of intercompany items. Taxes paid by the Partnership on behalf
of, or amounts withheld with respect to, all or less than all of the
Partners (not including taxes reimbursed pursuant to Section 3.07(b) of the
Delegation of Control Agreement) shall not be considered cash operating
expenditures of the Partnership which reduce Cash from Operations, but the
payment or withholding thereof shall be deemed to be a distribution of
Available Cash to such Partners. Alternatively, in the discretion of the
General Partner, such taxes (if pertaining to all Partners) may be
considered to be cash disbursements of the Partnership which reduce Cash
from Operations, but the payment or withholding thereof shall not be deemed
to be a distribution of Available Cash to such Partners. For purposes of
the foregoing, reserves do not include reserves outstanding at Partnership
Inception.
(d) Intentionally Omitted;
(e) Intentionally Omitted;
(f) Intentionally Omitted;
(g) Intentionally Omitted;
37
(h) "FIRST TARGET DISTRIBUTION" means $0.70 per Unit per calendar
quarter, subject to adjustment in accordance with Sections 5.9 and 9.6.
(i) "INTERIM CAPITAL TRANSACTIONS" means (i) borrowings and sales of
debt securities (other than for working capital purposes and for items
purchased on open account in the ordinary course of business) by the
Partnership or any Subsidiary, (ii) sales of equity interests by the
Partnership or any Subsidiary and (iii) sales or other voluntary or
involuntary dispositions of any assets of the Partnership or any Subsidiary
(other than (x) sales or other dispositions of inventory in the ordinary
course of business, (y) sales or other dispositions of other current assets
including accounts receivable or (z) sales or other dispositions of assets
as a part of normal retirements or replacements), in each case prior to the
commencement of the dissolution and liquidation of the Partnership. The
General Partner shall have the right to determine in its reasonable
discretion whether inventory reductions shall be considered in the ordinary
course of business or such a normal retirement.
(j) "MINIMUM QUARTERLY DISTRIBUTION" means $0.59 per Unit per
calendar quarter, subject to adjustment in accordance with Sections 5.9 and
9.6.
(k) "NET INCOME" means, for any taxable period, the excess, if any,
of the Partnership's items of income and gain (other than those included in
Net Termination Gain and Net Termination Loss) for such taxable period over
the Partnership's items of loss and deduction (other than those included in
Net Termination Gain and Net Termination Loss) for such taxable period. The
items included in the calculation of Net Income shall be determined in
accordance with Section 4.6(b) and shall not include any items specially
allocated under Section 5.1(d) or 5.1(e). Once an item of income, gain,
loss or deduction that has been included in the initial computation of Net
Income is subjected to a Required Allocation or a Discretionary Allocation,
the applicable Net Income or Net Loss shall be recomputed without regard to
such item. For purposes of Sections 5.1(a) and 5.1(b), in determining
whether Net Income has been allocated to any Unit or any Partner (as the
case may be) for any previous taxable period, any Unrealized Gain or
Unrealized Loss allocated pursuant to Section 4.6(d) shall be treated as an
item of gain or loss in computing Net Income.
(l) "NET LOSS" means, for any taxable period, the excess, if any, of
the Partnership's items of loss and deduction (other than those included in
Net Termination Gain and Net Termination Loss) for such taxable period over
the Partnership's items of income and gain (other than those included in
Net Termination Gain and Net Termination Loss) for such taxable period. The
items included in the calculation of Net Loss shall be determined in
accordance with Section 4.6(b) and shall not include any items specifically
allocated under Section 5.1(d) or 5.1(e). Once an item of income, gain,
loss or deduction that has been included in the initial computation of Net
Loss is subjected to a Required Allocation or a Discretionary Allocation,
the applicable Net Income or Net Loss shall be recomputed without regard to
such item. For purposes of Sections 5.1(a) and 5.1(b), in determining
whether Net Losses have been allocated to any Unit or any Partner (as the
38
case may be) for any previous taxable period, any Unrealized Gain or
Unrealized Loss allocated pursuant to Section 4.6(d) shall be treated as an
item of gain or loss in computing Net Losses.
(m) "NET TERMINATION GAIN" means the sum, if positive, of all items
of income, gain, loss and deduction (as determined in accordance with
Section 4.6(b)) recognized by the Partnership during the Partnership Year
in which the Partnership has dissolved and can no longer be continued
pursuant to Section 14.2 and all subsequent periods.
(n) "NET TERMINATION LOSS" means the sum, if negative, of all items
of income, gain, loss and deduction (as determined in accordance with
Section 4.6(b)) recognized by the Partnership during the Partnership Year
in which the Partnership has dissolved and can no longer be continued
pursuant to Section 14.2 and all subsequent periods.
(o) "SECOND TARGET DISTRIBUTION" means $0.99 per Unit per calendar
quarter, subject to adjustment in accordance with Sections 5.9 and 9.6.
5.9 ADJUSTMENT OF MINIMUM QUARTERLY DISTRIBUTION AND TARGET
DISTRIBUTION LEVELS.
(a) Adjustments of the Minimum Quarterly Distribution, First Target
Distribution and Second Target Distribution shall be made in the following
circumstances: (i) the Minimum Quarterly Distribution, First Target
Distribution and Second Target Distribution shall be proportionately
adjusted in the event of any distribution, combination or subdivision
(whether effected by a distribution payable in Units or otherwise) of Units
or other Partnership Securities in accordance with Section 4.11; PROVIDED,
HOWEVER, that no such adjustment shall be made as a result of any increase
in the number of I-Units or fractions of I-Units Outstanding pursuant to
Section 5.10(b) or 5.10(e); and (ii) in the event of a distribution of
Available Cash that is deemed to be Cash from Interim Capital Transactions,
the Minimum Quarterly Distribution, First Target Distribution and Second
Target Distribution shall be adjusted proportionately downward to equal the
product obtained by multiplying the otherwise applicable Minimum Quarterly
Distribution, First Target Distribution and Second Target Distribution, as
the same may have been previously adjusted, by a fraction of which the
numerator is the Unrecovered Initial Unit Price immediately after giving
effect to such distribution and of which the denominator is the Unrecovered
Initial Unit Price immediately prior to giving effect to such distribution.
(b) The Minimum Quarterly Distribution, First Target Distribution
and Second Target Distribution may also be adjusted under the
circumstances, and in the manner, set forth in Section 9.6.
39
5.10 SPECIAL PROVISIONS RELATING TO I-UNITS.
(a) Except as otherwise provided by Sections 14.3(b) and 14.3(c),
whenever distributions are made to Limited Partners holding Common Units
pursuant to Sections 5.5 and 5.7, the number of Outstanding I-Units will be
increased in accordance with paragraph (b) of this Section 5.10.
(b) Whenever Limited Partners holding Common Units receive
distributions of cash pursuant to Sections 5.5 and 5.7, the number of
Outstanding I-Units will be automatically subdivided, by means of a split
of each Outstanding I-Unit, or fraction thereof, with the result that each
Limited Partner holding I-Units will own a number of additional fractional
I-Units per each I-Unit, or fraction thereof, held by such Limited Partner
immediately prior to the Record Date for the related cash distribution to
Limited Partners holding Common Units, which number shall equal the
Calculated Unit Amount. Each fractional I-Unit that is created pursuant to
this Section 5.10(b) as a result of distributions of cash to Limited
Partners holding Common Units pursuant to Sections 5.5 and 5.7 shall be
equal to and represented by a fraction that is calculated to six decimal
places (without rounding), and any calculation that would result in a
fractional interest in excess of one-millionth (1/1,000,000) of an I-Unit
shall be disregarded without payment or other consideration and shall not
be accumulated. The creation of additional fractional I-Units pursuant to
this Section 5.10(b) will not result in any adjustment to the aggregate
Capital Account of each holder of I-Units.
(c) As used in this Agreement, (i) "EQUIVALENT NON-CASH AMOUNT"
means, for each I-Unit, an amount equal to the cash distribution made on a
Common Unit pursuant to Sections 5.5 and 5.7; (ii) "CALCULATED UNIT AMOUNT"
means a fraction of an I-Unit calculated per I-Unit, or fraction thereof,
by dividing the Equivalent Non-Cash Amount by the Average Market Price; and
(iii) "AVERAGE MARKET PRICE" means the average of the daily Closing Prices
per Listed Share for the ten consecutive Trading Days prior to the date on
which the Listed Shares begin to trade ex-dividend, but not including that
date. For purposes of this Section 5.10(c), the "date on which the Listed
Shares begin to trade ex-dividend" means the date on which "ex-dividend"
trading commences for a Share Distribution on the principal National
Securities Exchange on which the Listed Shares are listed or admitted to
trading.
(d) At any time during which there are any I-Units Outstanding, the
Partnership will not:
(i) make a distribution on a Common Unit other than in cash,
Common Units or a Partnership Security that is in all material
respects the same as the Common Units;
(ii) except pursuant to Section 14.3(b), make a distribution
on an I-Unit other than in additional I-Units or a security that is in
all material respects the same as the I-Units;
40
(iii) allow a Limited Partner holding Common Units to receive
any consideration other than cash or Common Units or a security that
is in all material respects the same as the Common Units or allow a
Limited Partner holding I-Units to receive any consideration other
than additional I-Units or a security that is in all material respects
the same as the I-Units in a (A) merger, if the Limited Partners of
the Partnership immediately prior to the transaction own more than 50%
of the residual common equity securities of the survivor immediately
after the transaction, or (B) recapitalization, reorganization or
similar transaction;
(iv) be a party to a merger, sell all or substantially all of
the Partnership's assets to another Person or enter into similar
transactions if (A) the survivor of the merger or the other Person is
to be an Affiliate of Enbridge Inc. after the transaction; and (B) the
transaction will result in the occurrence of a Special Event;
(v) make a tender offer for Common Units unless the
consideration payable in such tender offer (A) is exclusively cash;
and (B) together with any cash payable in respect of any other tender
offer by the Partnership for Common Units concluded within the
preceding 360 days and the aggregate amount of any cash distributions
to all Limited Partners holding Common Units made within the preceding
360 days, is less than 12% of the aggregate market value of all
Outstanding Units determined on the Trading Day immediately preceding
the commencement of the tender offer;
(vi) issue any I-Units to any Person other than EEM; or
(vii) take any action that would result in the occurrence of a
Special Event under clause (a) or (b) of the definition of "Special
Event" in Section 1.01 of the Purchase Provisions unless, prior to the
occurrence of such Special Event, the Purchaser has notified the
Company and the Partnership that such Special Event shall constitute a
Special Purchase Event under the Purchase Provisions.
(e) In the event of any (i) consolidation or merger of the
Partnership with or into another Person in accordance with Section 16.1
(other than a consolidation or merger in which the Partnership is the
Surviving Business Entity and which does not result in any
reclassification, conversion, exchange or cancellation of Outstanding
Common Units) or (ii) sale or other disposition to another Person of all or
substantially all of the assets of the Partnership (any of the foregoing, a
"TRANSACTION"), lawful provision shall be made such that if the Limited
Partners holding Common Units receive cash in the Transaction, except as
provided in Section 14.3(b), the number of Outstanding I-Units will be
increased automatically by a split of each Outstanding I-Unit, or fraction
thereof, so that the Limited Partners holding such Outstanding I-Unit, or
fraction thereof, own, per Outstanding I-Unit, or fraction thereof, a
number of additional I-Units, or fractions thereof, equal to the cash
received on a Common Unit as a result of the Transaction divided by the
average of the daily Closing Prices per Listed Share for the 10 consecutive
41
Trading Days immediately prior to the effective date of the Transaction.
The creation of additional fractional I-Units pursuant to this Section
5.10(e) will not result in any adjustment to the aggregate Capital Account
of each holder of I-Units.
ARTICLE VI
MANAGEMENT AND OPERATION OF BUSINESS
6.1 MANAGEMENT.
(a) Subject to Sections 6.6(c) and 6.15, the General Partner shall
conduct, direct and exercise full control over all activities of the
Partnership. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership shall be
exclusively vested in the General Partner, and no Limited Partner or
Assignee shall have any right of control or management power over the
business and affairs of the Partnership. In addition to the powers now or
hereafter granted to a general partner of a limited partnership under
applicable law or which are granted to the General Partner under any other
provision of this Agreement, the General Partner, subject to Section 6.3,
shall have full power and authority to do all things and on such terms as
it, in its sole discretion, may deem necessary or desirable (i) to conduct
the business of the Partnership and its Subsidiaries, to exercise all
powers set forth in Section 3.2 and to effectuate the purposes set forth in
Section 3.1, including, without limitation, (A) the making of any
expenditures, the lending or borrowing of money, the assumption or
guarantee of, or other contracting for, indebtedness and other liabilities,
the issuance of evidences of indebtedness and the incurring of any other
obligations and the securing of same by mortgage, deed of trust or other
lien or encumbrance; (B) the making of tax, regulatory and other filings,
or rendering of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the Partnership or any
Subsidiary; (C) the acquisition, disposition, mortgage, pledge,
encumbrance, hypothecation or exchange of any or all of the assets of the
Partnership or any Subsidiary or the merger or other combination of the
Partnership or any Subsidiary with or into another Person (the matters
described in this clause (C) being subject, however, to any prior approval
that may be required by Section 6.3 and the limitations set forth in
Section 5.10(d)(iv)); (D) the use of the assets of the Partnership or any
Subsidiary (including, without limitation, cash on hand) for any purpose
consistent with the terms of this Agreement, including, without limitation,
the financing of the conduct of the operations of the Partnership or any
Subsidiary, the lending of funds to other Persons (including, without
limitation, any Subsidiary) and the repayment of obligations of the
Partnership or any Subsidiary and the making of capital contributions to
any Subsidiary; (E) the negotiation, execution and performance of any
contracts, conveyances or other instruments (including, without limitation,
instruments that limit the liability of the Partnership under contractual
arrangements to all or particular assets of the Partnership, with the other
party to the contract to have no recourse against the General Partner or
its assets other than its interest in the Partnership, even if same results
in the terms of the transaction being less favorable to the Partnership
than would otherwise be the case); (F) the distribution of Partnership
cash; (G) the selection and dismissal of employees
42
(including, without limitation, employees having titles such as
"president," "vice president," "secretary" and "treasurer") agents, outside
attorneys, accountants, consultants and contractors and the determination
of their compensation and other terms of employment or hiring; (H) the
maintenance of insurance for the benefit of the Partners and the
Partnership or any Subsidiary (including, without limitation, the assets
and operations of the Partnership or any Subsidiary); (I) the formation of,
or acquisition of an interest in, and the contribution of property to, any
further limited or general partnerships, limited liability companies, joint
ventures or other relationships (including, without limitation, the
acquisition of interests in, and the contributions of property to, any
Subsidiary from time to time); (J) the control of any matters affecting the
rights and obligations of the Partnership, including, without limitation,
the bringing and defending of actions at law or in equity and otherwise
engaging in the conduct of litigation and the incurring of legal expense
and the settlement of claims and litigation; (K) the indemnification of any
Person against liabilities and contingencies to the extent permitted by
law; (L) the entering into of listing agreements with the New York Stock
Exchange and any other securities exchange and the delisting of some or all
of the Units from, or requesting that trading be suspended on, any such
exchange (subject to any prior approval that may be required under Section
1.6); and (M) the purchase, sale or other acquisition or disposition of
Units; and (ii) to undertake any action in connection with the
Partnership's direct or indirect participation in, or the direct or
indirect exercise of any of its rights in connection with, any Subsidiary
as a partner, member, shareholder or other equity interest holder
(including, without limitation, contributions or loans of funds by the
Partnership to any Subsidiary).
(b) Notwithstanding any other provision of this Agreement, any
Subsidiary Agreement, the Delaware Act or any applicable law, rule or
regulation, each of the Partners and Assignees and each other Person who
may acquire an interest in Units hereby (i) approves, ratifies and confirms
the execution, delivery and performance by the parties thereto of the First
Mortgage Note Agreements, the First Mortgage Notes, the related mortgage,
the revolving credit facility, the Operating Partnership Agreement, the
Underwriting Agreement, the Conveyance Agreement, the LPL Contribution
Agreement, the Distribution Support Agreement (as each of the foregoing is
defined or otherwise described in the Registration Statement) and the other
agreements described in or filed as part of the Registration Statement;
(ii) agrees that the General Partner is authorized to execute, deliver and
perform the agreements referred to in clause (i) of this sentence and the
other agreements, acts, transactions and matters described in the
Registration Statement on behalf of the Partnership without any further
act, approval or vote of the Partners or the Assignees or the other Persons
who may acquire an interest in Units; and (iii) agrees that none of the
execution, delivery or performance by the General Partner, the Partnership,
any Subsidiary or any Affiliate thereof of any agreement authorized or
permitted under this Agreement (including, without limitation, the exercise
by the General Partner or any Affiliate of the General Partner of the
rights accorded pursuant to Article XVII) shall constitute a breach by the
General Partner of any duty that the General Partner may owe the
Partnership or the Limited Partners or the Assignees or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
43
6.2 CERTIFICATE OF LIMITED PARTNERSHIP. The General Partner has
caused the Certificate of Limited Partnership to be filed with the Secretary of
State of the State of Delaware as required by the Delaware Act and shall use all
reasonable efforts to cause to be filed such other certificates or documents as
may be determined by the General Partner in its sole discretion to be reasonable
and necessary or appropriate for the formation, continuation, qualification and
operation of a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware or any other state in
which the Partnership may elect to do business or own property. To the extent
that such action is determined by the General Partner in its sole discretion to
be reasonable and necessary or appropriate, the General Partner shall file
amendments to and restatements of the Certificate of Limited Partnership and do
all things to maintain the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) under the laws
of the State of Delaware or of any other state in which the Partnership may
elect to do business or own property. Subject to the terms of Section 7.5(a),
the General Partner shall not be required, before or after filing, to deliver or
mail a copy of the Certificate of Limited Partnership, any qualification
document or any amendment thereto to any Limited Partner or Assignee.
6.3 RESTRICTIONS ON GENERAL PARTNER'S AUTHORITY.
(a) The General Partner may not, without written approval of the
specific act by all of the Limited Partners or by other written instrument
executed and delivered by all of the Limited Partners subsequent to the
date of this Agreement, take any action in contravention of this Agreement,
including, without limitation, (i) any act that would make it impossible to
carry on the ordinary business of the Partnership, except as otherwise
provided in this Agreement; (ii) possess Partnership property, or assign
any rights in specific Partnership property, for other than a Partnership
purpose; (iii) admit a Person as a Partner, except as otherwise provided in
this Agreement; (iv) amend this Agreement in any manner, except as
otherwise provided in this Agreement or applicable law; or (v) transfer its
interest as general partner of the Partnership, except as otherwise
provided in this Agreement.
(b) Except as provided in Article XIV, the General Partner may not
sell, exchange or otherwise dispose of all or substantially all of the
Partnership's assets in a single transaction or a series of related
transactions (including by way of merger, consolidation or other
combination with any other Person) or approve on behalf of the Partnership
the sale, exchange or other disposition of all or substantially all of the
assets of Enbridge Energy, Limited Partnership, without the approval of the
holders of at least a majority of the Outstanding Units; PROVIDED, HOWEVER,
that this provision shall not preclude or limit the General Partner's
ability to mortgage, pledge, hypothecate or grant a security interest in
all or substantially all of the Partnership's assets or any Subsidiary's
assets and shall not apply to any forced sale of any or all of the
Partnership's assets or any Subsidiary's assets pursuant to the foreclosure
of, or other realization upon, any such encumbrance. Without the approval
of the holders of at least a majority of the Outstanding Units, the General
Partner shall not, on behalf of the Partnership, consent to any amendment
to the partnership agreement of Enbridge Energy, Limited Partnership or,
44
except as expressly permitted by Section 6.9(d), take any action permitted
to be taken by the limited partner of Enbridge Energy, Limited Partnership,
in either case, that would adversely affect the Partnership as a limited
partner of Enbridge Energy, Limited Partnership.
(c) Unless approved by the affirmative vote of the holders of at
least 66 2/3% of each class of the Outstanding Units, the General Partner
shall not take any action or refuse to take any reasonable action the
effect of which, if taken or not taken, as the case may be, would be to
cause the Partnership or any Subsidiary to be taxable as a corporation or
otherwise taxed as an entity for federal income tax purposes.
(d) At all times while serving as the general partner of the
Partnership, the General Partner shall not make any dividend or
distribution on, or repurchase any shares of, its stock or take any other
action within its control if the effect of such dividend, distribution,
repurchase or other action would be to reduce its net worth below an amount
necessary to receive an Opinion of Counsel that the Partnership will be
treated as a partnership for federal income tax purposes.
6.4 REIMBURSEMENT OF THE GENERAL PARTNER.
(a) Except as provided in this Section 6.4 and elsewhere in this
Agreement, the General Partner shall not be compensated for its services as
general partner of the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole
discretion, for (i) all direct and indirect expenses it incurs or payments
it makes on behalf of the Partnership and any Subsidiary (including,
without limitation, amounts paid to any Person to perform services for the
Partnership or for the benefit of the Partnership or to or on behalf of any
Subsidiary), and (ii) that portion of the General Partner's or its
Affiliates' legal, accounting, investor communications, utilities,
telephone, secretarial, travel, entertainment, bookkeeping, reporting, data
processing, office rent and other office expenses (including, without
limitation, overhead charges), salaries, fees and other compensation and
benefit expenses of employees, officers and directors, insurance, other
administrative or overhead expenses and all other expenses, in each such
case, necessary or appropriate to the conduct of the Partnership's business
and allocable to the Partnership or otherwise incurred by the General
Partner in connection with operating the Partnership's business (including,
without limitation, expenses allocated to the General Partner by its
Affiliates). Any accruals by the General Partner of the expected cost of
providing all forms of post-retirement benefits to employees or former
employees of the General Partner and their beneficiaries and qualified
dependents will be borne by the Partnership. The General Partner shall
determine the fees and expenses that are allocable to the Partnership in
any reasonable manner determined by the General Partner in its sole
discretion. Such reimbursements shall be in addition to any reimbursement
to the General Partner as a result of indemnification pursuant to Section
6.7.
45
(c) Subject to Section 4.4(c), the General Partner in its sole
discretion and without the approval of the Limited Partners may propose and
adopt on behalf of the Partnership employee benefit plans (including,
without limitation, plans involving the issuance of Units, other than
I-Units), for the benefit of employees of the General Partner, the
Partnership, any Subsidiary or any Affiliate of any of them in respect of
services performed, directly or indirectly, for the benefit of the
Partnership or any Subsidiary.
6.5 OUTSIDE ACTIVITIES.
(a) The General Partner shall limit its activities to those required
or authorized by this Agreement or the Omnibus Agreement.
(b) Except as described in the Omnibus Agreement or as provided in
Section 6.5(a), each Indemnitee is free to engage in any business,
including any business that is in competition with the business of the
Partnership. The General Partner and any other Persons affiliated with the
General Partner may acquire Units or other Partnership Securities, in
addition to those acquired by any of such Persons on the Closing Date, and
shall be entitled to exercise all rights of an Assignee or Limited Partner,
as applicable, relating to such Units or Partnership Securities, as the
case may be.
(c) Without limiting Sections 6.5(a) and 6.5(b), but notwithstanding
anything to the contrary in this Agreement, the competitive activities of
Indemnitees described in the Registration Statement are hereby approved by
all Partners, and it shall not be deemed to be a breach of the General
Partner's fiduciary duty for the General Partner to permit an Indemnitee to
engage in a business opportunity in preference to or to the exclusion of
the Partnership, provided such activities are not prohibited by the Omnibus
Agreement.
6.6 LOANS TO AND FROM THE GENERAL PARTNER; CONTRACTS WITH
AFFILIATES.
(a) The General Partner or any Affiliate thereof may lend to the
Partnership or any Subsidiary, and the Partnership and any Subsidiary may
borrow, funds needed or desired by the Partnership and any Subsidiary for
such periods of time as the General Partner may determine; PROVIDED,
HOWEVER, that the General Partner or any of its Affiliates may not charge
the Partnership or any Subsidiary interest at a rate greater than the rate
that would be charged the Partnership or any such Subsidiary, as the case
may be (without reference to the General Partner's financial abilities or
guarantees), by unrelated lenders on comparable loans. The Partnership or
any Subsidiary, as the case may be, shall reimburse the General Partner or
any of its Affiliates, as the case may be, for any costs (other than any
additional interest costs) incurred by it in connection with the borrowing
of funds obtained by the General Partner or any of its Affiliates and
loaned to the Partnership or any such Subsidiary.
(b) The Partnership may lend or contribute to any Subsidiary, and
any Subsidiary may borrow, funds on terms and conditions established in the
sole discretion of the General Partner. The foregoing authority shall be
exercised by the General Partner
46
in its sole discretion and shall not create any right or benefit in favor
of any Subsidiary or any other Person. The Partnership may not lend funds
to the General Partner or any of its Affiliates, otherwise than for
short-term funds management purposes.
(c) The General Partner may itself, or may enter into an agreement,
including the Delegation of Control Agreement, with any of its Affiliates
to, render services to the Partnership or any Subsidiary. Any service
rendered to the Partnership or any Subsidiary by the General Partner or any
of its Affiliates shall be on terms that are fair and reasonable to the
Partnership; PROVIDED, HOWEVER, that the requirements of this Section
6.6(c) shall be deemed satisfied as to any transaction the terms of which
are no less favorable to the Partnership or the Subsidiary than those
generally being provided to or available from unrelated third parties. The
provisions of Section 6.4 shall apply to the rendering of services
described in this Section 6.6(c).
(d) The Partnership may transfer assets to joint ventures, other
partnerships, corporations or other business entities in which it is or
thereby becomes a participant upon such terms and subject to such
conditions as are consistent with this Agreement and applicable law.
(e) Neither the General Partner nor any of its Affiliates shall
sell, transfer or convey any property to, or purchase any property from,
the Partnership, directly or indirectly, except pursuant to transactions
that are fair and reasonable to the Partnership; PROVIDED, HOWEVER, that
the requirements of this Section 6.6(e) shall be deemed to be satisfied (i)
as to the transactions effected pursuant to Sections 4.2 and 4.3 of the
Second Amended and Restated Agreement or any substantially similar
provisions of any Prior Agreement, the Conveyance Agreement, and any other
transactions described in or contemplated by the Registration Statement,
and (ii) as to any transaction the terms of which are no less favorable to
the Partnership than those generally being provided to or available from
unrelated third parties.
(f) The General Partner and its Affiliates shall have no obligation
to permit the Partnership or any Subsidiary to use any facilities of the
General Partner and its Affiliates, except as may be provided in contracts
entered into from time to time specifically dealing with such use, nor
shall there be any obligation of the General Partner or its Affiliates to
enter into such contracts.
6.7 INDEMNIFICATION.
(a) To the fullest extent permitted by law but subject to the
limitations expressly provided in this Agreement, each Indemnitee shall be
indemnified and held harmless by the Partnership from and against any and
all losses, claims, damages, liabilities (joint or several), expenses
(including, without limitation, legal fees and expenses), judgments, fines,
settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, whether civil, criminal, administrative or
investigative, in which any Indemnitee may be involved, or is threatened to
be involved, as a party or otherwise, by reason of its status as (i) the
General Partner, a Departing
47
Partner or any of their Affiliates, (ii) an officer, director, employee,
partner, agent or trustee of the General Partner, any Departing Partner or
any of their Affiliates or (iii) a Person serving at the request of the
Partnership in another entity in a similar capacity; PROVIDED, that in each
case the Indemnitee acted in good faith, in a manner which such Indemnitee
believed to be in, or not opposed to, the best interests of the Partnership
and, with respect to any criminal proceeding, had no reasonable cause to
believe its conduct was unlawful; PROVIDED, FURTHER, that no
indemnification pursuant to this Section 6.7 shall be available to the
General Partner or Enbridge Inc. with respect to their respective
obligations incurred pursuant to the Underwriting Agreement, the Conveyance
Agreement or the Contribution Agreement (other than obligations incurred by
the General Partner on behalf of the Partnership or any Subsidiary). The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that the Indemnitee acted in a
manner contrary to that specified above. Any indemnification pursuant to
this Section 6.7 shall be made only out of the assets of the Partnership.
(b) To the fullest extent permitted by law, expenses (including,
without limitation, reasonable legal fees and expenses) incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Partnership prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt
by the Partnership of an undertaking by or on behalf of the Indemnitee to
repay such amount if it shall be determined that the Indemnitee is not
entitled to be indemnified as authorized in this Section 6.7.
(c) The indemnification provided by this Section 6.7 shall be in
addition to any other rights to which an Indemnitee may be entitled under
any agreement, pursuant to any vote of the Partners, as a matter of law or
otherwise, both as to actions in the Indemnitees' capacity as (i) the
General Partner, a Departing Partner or an Affiliate thereof, (ii) an
officer, director, employee, partner, agent or trustee of the General
Partner, any Departing Partner or an Affiliate thereof or (iii) a Person
serving at the request of the Partnership in another entity in a similar
capacity, and shall continue as to an Indemnitee who has ceased to serve in
such capacity and as to actions in any other capacity.
(d) The Partnership may purchase and maintain (or reimburse the
General Partner or its Affiliates for the cost of) insurance, on behalf of
the General Partner and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expense
that may be incurred by such Person in connection with the Partnership's
activities, whether or not the Partnership would have the power to
indemnify such Person against such liabilities under the provisions of this
Agreement.
(e) For purposes of this Section 6.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
48
assessed on an Indemnitee with respect to an employee benefit plan pursuant
to applicable law shall constitute "fines" within the meaning of Section
6.7 (a); and action taken or omitted by it with respect to an employee
benefit plan in the performance of its duties for a purpose reasonably
believed by it to be in the interest of the participants and beneficiaries
of the plan shall be deemed to be for a purpose which is in, or not opposed
to, the best interests of the Partnership.
(f) In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in
this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 6.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
(h) The provisions of this Section 6.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons.
(i) No amendment, modification or repeal of this Section 6.7 or any
other provision hereof shall in any manner terminate, reduce or impair the
right of any past, present or future Indemnitee to be indemnified by the
Partnership, nor the obligation of the Partnership to indemnify any such
Indemnitee under and in accordance with the provisions of this Section 6.7
as in effect immediately prior to such amendment, modification or repeal
with respect to claims arising from or relating to matters occurring, in
whole or in part, prior to such amendment, modification or repeal,
regardless of when such claims may arise or be asserted.
6.8 LIABILITY OF INDEMNITEES.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no Indemnitee shall be liable for monetary damages to the
Partnership, the Limited Partners, the Assignees or any other Persons who
have acquired interests in the Units, for losses sustained or liabilities
incurred as a result of any act or omission if such Indemnitee acted in
good faith.
(b) Subject to its obligations and duties as General Partner set
forth in Section 6.1(a), the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon
it hereunder either directly or by or through its agents, and the General
Partner shall not be responsible for any misconduct or negligence on the
part of any such agent appointed by the General Partner in good faith.
Notwithstanding the preceding sentence, the General Partner shall be
responsible for any misconduct or negligence on the part of EEM in
performing the Maximum Permitted Delegation.
49
(c) Any amendment, modification or repeal of this Section 6.8 or any
other provision hereof shall be prospective only and shall not in any way
affect the limitations on the liability of the Indemnitees under this
Section 6.8 as in effect immediately prior to such amendment, modification
or repeal with respect to claims arising from or relating to matters
occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.
6.9 RESOLUTION OF CONFLICTS OF INTEREST.
(a) Unless otherwise expressly provided in this Agreement or any
Subsidiary Agreement or the Omnibus Agreement, whenever a potential
conflict of interest exists or arises between the General Partner or any of
its Affiliates, on the one hand, and the Partnership, any Subsidiary, any
Partner or any Assignee, on the other hand, any resolution or course of
action in respect of such conflict of interest shall be permitted and
deemed approved by all Partners, and shall not constitute a breach of this
Agreement, of any Subsidiary Agreement, of any agreement contemplated
herein or therein, or of any duty stated or implied by law or equity, if
the resolution or course of action is or, by operation of this Agreement,
is deemed to be, fair and reasonable to the Partnership. The General
Partner shall be authorized in connection with its resolution of any
conflict of interest to consider (i) the relative interests of any party to
such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interest; (ii) any customary or accepted industry
practices and any customary or historical dealings with a particular
Person; (iii) any applicable generally accepted accounting or engineering
practices or principles; and (iv) such additional factors as the General
Partner determines in its sole discretion to be relevant, reasonable or
appropriate under the circumstances. Nothing contained in this Agreement,
however, is intended to nor shall it be construed to require the General
Partner to consider the interests of any Person other than the Partnership.
In the absence of bad faith by the General Partner, the resolution, action
or terms so made, taken or provided by the General Partner with respect to
such matter shall not constitute a breach of this Agreement or any other
agreement contemplated herein or a breach of any standard of care or duty
imposed herein or therein or under the Delaware Act or any other law, rule
or regulation.
(b) Whenever this Agreement or any other agreement contemplated
hereby provides that the General Partner or any of its Affiliates is
permitted or required to make a decision (i) in its "sole discretion" or
"discretion" that it deems "necessary or appropriate" or under a grant of
similar authority or latitude, the General Partner or such Affiliate shall
be entitled to consider only such interests and factors as it desires and
shall have no duty or obligation to give any consideration to any interest
of, or factors affecting, the Partnership, any Subsidiary, any Limited
Partner or any Assignee, or (ii) in "good faith" or under another express
standard, the General Partner or such Affiliate shall act under such
express standard and shall not be subject to any other or different
standards imposed by this Agreement, any Subsidiary Agreement, any other
agreement contemplated hereby or under the Delaware Act or any other law,
rule or regulation. In addition, any actions taken by the General Partner
consistent with the standards of
50
"reasonable discretion" set forth in the definitions of Available Cash or
Cash from Operations shall not constitute a breach of any duty of the
General Partner to the Partnership or the Limited Partners. The General
Partner shall have no duty, express or implied, to sell or otherwise
dispose of any asset of any Subsidiary or of the Partnership, other than in
the ordinary course of business. No borrowing by the Partnership or any
Subsidiary or the approval thereof by the General Partner shall be deemed
to constitute a breach of any duty of the General Partner to the
Partnership or the Limited Partners by reason of the fact that the purpose
or effect of such borrowing is directly or indirectly to enable the General
Partner to receive Incentive Distributions.
(c) Whenever a particular transaction, arrangement or resolution of
a conflict of interest is required under this Agreement to be "fair and
reasonable" to any Person, the fair and reasonable nature of such
transaction, arrangement or resolution shall be considered in the context
of all similar or related transactions.
(d) The Limited Partners hereby authorize the General Partner, on
behalf of the Partnership as a partner, member, shareholder or other equity
interest holder of any Subsidiary, to approve actions by any Subsidiary
similar to those actions permitted to be taken by the General Partner
pursuant to this Section 6.9.
6.10 OTHER MATTERS CONCERNING THE GENERAL PARTNER.
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted in
reliance upon the opinion (including, without limitation, an Opinion of
Counsel) of such Persons as to matters that the General Partner reasonably
believes to be within such Person's professional or expert competence shall
be conclusively presumed to have been done or omitted in good faith and in
accordance with such opinion.
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in
the power of attorney, have full power and authority to do and perform each
and every act and duty that is permitted or required to be done by the
General Partner hereunder.
(d) Any standard of care and duty imposed by this Agreement or under
the Delaware Act or any applicable law, rule or regulation shall be
modified, waived or limited as required to permit the General Partner to
act under this Agreement or any other agreement contemplated by this
Agreement and to make any decision pursuant to the
51
authority prescribed in this Agreement, so long as such action is
reasonably believed by the General Partner to be in the best interests of
the Partnership.
6.11 TITLE TO PARTNERSHIP ASSETS. Title to Partnership Assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an entity, and no Partner or Assignee,
individually or collectively, shall have any ownership interest in such
Partnership Assets or any portion thereof. Title to any or all of the
Partnership Assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine. The
General Partner hereby declares and warrants that any Partnership Assets for
which record title is held in the name of the General Partner shall be held by
the General Partner for the exclusive use and benefit of the Partnership in
accordance with the provisions of this Agreement; PROVIDED, HOWEVER, that the
General Partner shall use its reasonable efforts to cause record title to such
assets (other than those assets in respect of which the General Partner
determines that the expense and difficulty of conveyancing makes transfer of
record title to the Partnership impracticable) to be vested in the Partnership
as soon as reasonably practicable. All Partnership Assets shall be recorded as
the property of the Partnership in its books and records, irrespective of the
name in which record title to such Partnership assets are held.
6.12 PURCHASE OR SALE OF CLASS A COMMON UNITS. Subject to Section
5.10(d)(v), the General Partner may cause the Partnership to purchase or
otherwise acquire Class A Common Units. As long as Class A Common Units are held
by the Partnership or any Subsidiary, such Class A Common Units shall not be
considered Outstanding for any purpose, except as otherwise provided herein. The
General Partner or any Affiliate of the General Partner may also purchase or
otherwise acquire and sell or otherwise dispose of Class A Common Units for its
own account, subject to the provisions of Articles XI and XII.
6.13 RELIANCE BY THIRD PARTIES. Notwithstanding anything to the
contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. Each
Limited Partner hereby waives any and all defenses or other remedies that may be
available against such Person to contest, negate or disaffirm any action of the
General Partner in connection with any such dealing. In no event shall any
Person dealing with the General Partner or its representatives be obligated to
ascertain that the terms of this Agreement have been complied with or to inquire
into the necessity or expedience of any act or action of the General Partner or
its representatives. Each and every certificate, document or other instrument
executed on behalf of the Partnership by the General Partner or its
representatives shall be conclusive evidence in favor of any and every Person
relying thereon or claiming thereunder that (a) at the time of the execution and
delivery of such certificate, document or instrument, this Agreement was in full
force and effect, (b) the Person executing and delivering such certificate,
document or instrument was duly authorized and empowered to do so for and on
behalf of the Partnership and (c) such certificate, document or
52
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
6.14 REGISTRATION RIGHTS OF THE GENERAL PARTNER AND ITS AFFILIATES.
(a) If (i) the General Partner or any of its Affiliates (including,
for purposes of this Section 6.14, Persons that are Affiliates at the date
hereof notwithstanding that they may later cease to be Affiliates) hold
Units or other Partnership Securities which it desires to sell and (ii)
Rule 144 of the Securities Act (or any successor rule or regulation to Rule
144) is not available to enable the General Partner or such Affiliates to
dispose of the number of Units or other Partnership Securities it desires
to sell at the time it desires to do so, then upon the request of the
General Partner or any of its Affiliates, the Partnership shall file with
the Securities and Exchange Commission as promptly as practicable after
receiving such request, and use all reasonable efforts to cause to become
effective and remain effective for a reasonable period following its
effective date, a registration statement or statements under the Securities
Act registering the offering and sale of the number of Units or other
Partnership Securities specified in the request. All registrations
requested pursuant to this Section 6.14(a) are referred to as "DEMAND
REGISTRATIONS." The Partnership may postpone for up to six months the
filing or the effectiveness of a registration statement pursuant to a
Demand Registration if (i) the General Partner or, (ii) if at the time a
request for Demand Registration is submitted to the Partnership the Person
requesting registration is an Affiliate of the General Partner, a majority
of the independent directors of the General Partner, determines in its good
faith judgment that a postponement of the requested registration for up to
six months would be in the best interests of the Partnership and its
Partners due to a pending transaction, investigation or other event. In
connection with any Demand Registration, the Partnership shall promptly
prepare and file (x) such documents as may be necessary to register or
qualify the securities subject to such registration under the securities
laws of such states as the Persons requesting registration shall reasonably
request; PROVIDED, HOWEVER, that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Partnership would become
subject to general service of process or to taxation or qualification to do
business as a foreign corporation doing business in such jurisdiction, and
(y) such documents as may be necessary to apply for listing or to list the
securities subject to such registration on such National Securities
Exchange as the Persons requesting registration shall reasonably request,
and do any and all other acts and things that may reasonably be necessary
or advisable to enable such Persons to consummate a public sale of such
securities in such states. Except as set forth in subsection (c) below, all
costs and expenses of any such Demand Registration and offering shall be
paid by the Persons requesting registration, without reimbursement by the
Partnership.
(b) If the Partnership shall at any time propose to file a
registration statement under the Securities Act for an offering of
securities of the Partnership for cash (other than pursuant to a Demand
Registration or an offering relating solely to an employee benefit plan),
the Partnership shall use its best efforts to include such number or amount
53
of securities held by the General Partner and any of its Affiliates in such
registration statement as the General Partner or any of such Affiliates
shall request. All registrations requested by the Purchaser pursuant to
this Section 6.14(b) are referred to herein as "PIGGYBACK REGISTRATIONS."
If the proposed offering shall be an underwritten offering, then, in the
event that the managing underwriter of such offering advises the General
Partner or any of such Affiliates in writing that in its opinion the
inclusion of all or some of the securities of the Persons requesting
Piggyback Registration would adversely and materially affect the success of
the offering, the Partnership shall include in such offering only that
number or amount, if any, of securities of the Persons requesting Piggyback
Registration which, in the opinion of the managing underwriter, will not so
adversely and materially affect the offering. In connection with any
Piggyback Registration, the General Partner or any of its Affiliates
requesting registration shall bear the expense of all underwriting
discounts and commissions attributable to the securities sold for their own
respective accounts and shall reimburse the Partnership for all incremental
costs incurred by the Partnership in connection with such registration
resulting from the inclusion of the securities held by the General Partner
or any of its Affiliates.
(c) If underwriters are engaged in connection with any Demand or
Piggyback Registration the Partnership shall provide indemnification,
representations, covenants, opinions and other assurance to the
underwriters in form and substance reasonably satisfactory to such
underwriters. Further, in addition to and not in limitation of the
Partnership's obligation under Section 6.7, the Partnership shall, to the
fullest extent permitted by law, indemnify and hold harmless the General
Partner or such other holder, its officers, directors and each Person who
controls the General Partner or such other holder (within the meaning of
the Securities Act) and any agent thereof (collectively, "INDEMNIFIED
PERSONS") against any losses, claims, demands, actions, causes of action,
assessments, damages, liabilities (joint or several), costs and expenses
(including without limitation, interest, penalties and reasonable
attorneys' fees and disbursements), resulting to, imposed upon, or incurred
by an Indemnified Person, directly or indirectly, under the Securities Act
or otherwise (hereinafter referred to in this Section 6.14(c) as a "claim"
and in the plural as "claims"), based upon, arising out of, or resulting
from any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which any securities were
registered under the Securities Act or any state securities or Blue Sky
laws, in any preliminary prospectus (if used prior to the effective date of
such registration statement), or in any summary or final prospectus or in
any amendment or supplement thereto (if used during the period the
Partnership is required to keep the registration statement current), or
arising out of, based upon or resulting from the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading; PROVIDED,
HOWEVER, that the Partnership shall not be liable to the extent that any
such claim arises out of, is based upon or results from an untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary, summary or final prospectus or
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Partnership by or on behalf of such
Indemnified Person specifically for use in the preparation thereof.
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(d) The provisions of Sections 6.14(a) and 6.14(b) shall continue to
be applicable with respect to the General Partner and any of its Affiliates
after the General Partner ceases to be a Partner of the Partnership, during
a period of two years subsequent to the effective date of such cessation
and for so long thereafter as is required for the General Partner or any of
its Affiliates to sell all of the Units or other Partnership Securities
with respect to which the General Partner or any of its Affiliates have
requested during such two-year period that a registration statement be
filed; PROVIDED, HOWEVER, that the Partnership shall not be required to
file successive registration statements covering the same securities for
which registration was demanded during such two-year period. The provisions
of Section 6.14(c) shall continue in effect thereafter.
(e) Any request to register Partnership Securities pursuant to this
Section 6.14 shall (i) specify the Partnership Securities intended to be
offered and sold by the Person making the request, (ii) express such
Person's present intent to offer such shares for distribution, (iii)
describe the nature or method of the proposed offer and sale of Partnership
Securities, and (iv) contain the undertaking of such Person to provide all
such information and materials and take all action as may be required in
order to permit the Partnership to comply with all applicable requirements
in connection with the registration of such Partnership Securities.
6.15 DELEGATION TO EEM.
(a) Pursuant to Section 6.6(c) of this Agreement and in accordance
with Section 17-403(c) of the Delaware Act, the General Partner shall make
the Maximum Permitted Delegation; PROVIDED, HOWEVER, that the making of the
Maximum Permitted Delegation shall not cause the General Partner to cease
to be the sole general partner of the Partnership; and PROVIDED FURTHER,
that the General Partner shall not be relieved of any of its
responsibilities or obligations to the Partnership or the Limited Partners
as a result of the Maximum Permitted Delegation. The General Partner shall
retain all of its Partnership Interest, Percentage Interest, rights to
Incentive Distributions, rights to allocations of Net Income and Net
Losses, rights to allocations of Net Termination Gains and Net Termination
Losses, and rights to distributions pursuant to Sections 5.3, 5.5, 5.7 and
14.3. The specific terms and conditions of the delegation to EEM are set
forth in the Delegation of Control Agreement.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, and except to the extent otherwise provided in the Delegation of
Control Agreement, until such date as the Maximum Permitted Delegation is
terminated in accordance with the Delegation of Control Agreement, the
provisions of this Agreement that apply to the management and control of
the Partnership, including, without limitation, Sections 6.1, 6.3, 6.4,
6.5, 6.6, 6.9, 6.10, 6.11, 6.12 and 6.13 shall apply to EEM to the same
extent as such provisions apply to the General Partner.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, the provisions of Sections 6.7 and 6.8 of this Agreement shall
apply to EEM and any Person
55
who is or was a manager, officer or director of EEM to the same extent as
such provisions apply to the General Partner and any Person who is or was
an officer or director of the General Partner.
ARTICLE VII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
7.1 LIMITATION OF LIABILITY. The Limited Partners and the Assignees
shall have no liability under this Agreement except as expressly provided in
this Agreement or the Delaware Act.
7.2 MANAGEMENT OF BUSINESS. No Limited Partner or Assignee (other
than the General Partner, any of its Affiliates or any officer, director,
employee, partner, agent or trustee of the General Partner or any of its
Affiliates, in its capacity as such, if such Person shall also be a Limited
Partner or Assignee) shall take part in the operation, management or control
(within the meaning of the Delaware Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner or any of its Affiliates, in
its capacity as such, shall not affect, impair or eliminate the limitations on
the liability of the Limited Partners or Assignees under this Agreement.
7.3 OUTSIDE ACTIVITIES. Subject to the provisions of Section 6.5,
which shall continue to be applicable to the Persons referred to therein,
regardless of whether such Persons shall also be Limited Partners or Assignees,
any Limited Partner or Assignee shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including, without limitation, business interests and activities in
direct competition with the Partnership or any Subsidiary. Neither the
Partnership nor any of the other Partners or Assignees shall have any rights by
virtue of this Agreement in any business ventures of any Limited Partner or
Assignee.
7.4 RETURN OF CAPITAL. No Limited Partner shall be entitled to the
withdrawal or return of his Capital Contribution, except to the extent, if any,
that distributions made pursuant to this Agreement or upon termination of the
Partnership may be considered as such by law and then only to the extent
provided for in this Agreement. Except to the extent provided by Article V or as
otherwise expressly provided in this Agreement, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions or as to profits, losses or distributions. Any
such return shall be a compromise to which all Partners and Assignees agree
within the meaning of Section 17.502(b) of the Delaware Act.
7.5 RIGHTS OF LIMITED PARTNERS RELATING TO THE PARTNERSHIP.
(a) In addition to other rights provided by this Agreement or by
applicable law, and except as limited by Section 7.5(b), each Limited
Partner shall have the right,
56
for a purpose reasonably related to such Limited Partner's interest as a
limited partner in the Partnership, upon reasonable demand and at such
Limited Partner's own expense:
(i) to obtain true and full information regarding the status
of the business and financial condition of the Partnership;
(ii) promptly after becoming available, to obtain a copy of
the Partnership's federal, state and local tax returns for each year;
(iii) to have furnished to him, upon notification to the
General Partner, a current list of the name and last known business,
residence or mailing address of each Partner;
(iv) to have furnished to him, upon notification to the
General Partner, a copy of this Agreement and the Certificate of
Limited Partnership and all amendments thereto;
(v) to obtain true and full information regarding the amount
of cash and description and statement of the Agreed Value of any other
Capital Contribution by each Partner and which each Partner has agreed
to contribute in the future, and the date on which each became a
Partner; and
(vi) to obtain such other information regarding the affairs of
the Partnership as is just and reasonable.
(b) Notwithstanding any other provision of this Agreement, the
General Partner may keep confidential from the Limited Partners and
Assignees for such period of time as the General Partner deems reasonable,
any information that the General Partner reasonably believes to be in the
nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or could damage the Partnership or any Subsidiary or that the
Partnership or any Subsidiary is required by law or by agreements with
third parties to keep confidential (other than agreements with Affiliates
the primary purpose of which is to circumvent the obligations set forth in
Section 7.5).
ARTICLE VIII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
8.1 RECORDS AND ACCOUNTING. The General Partner shall keep or cause
to be kept at the principal office of the Partnership appropriate books and
records with respect to the Partnership's business including, without
limitation, all books and records necessary to provide to the Limited Partners
any information, lists and copies of documents required to be provided pursuant
to Section 7.5(a). Any books and records maintained by or on behalf of the
Partnership in the regular course of its business, including, without
limitation, the record of the Record Holders and Assignees of Units or other
Partnership Securities, books of account and records of Partnership proceedings,
may be kept on, or be in the form of, computer disks, hard disks, punch
57
cards, magnetic tape, photographs, micrographics or any other information
storage device, provided, that the books and records so maintained are
convertible into clearly legible written form within a reasonable period of
time. The books of the Partnership shall be maintained, for financial reporting
purposes, on an accrual basis in accordance with generally accepted accounting
principles.
8.2 FISCAL YEAR. The fiscal year of the Partnership shall be the
calendar year.
8.3 REPORTS.
(a) As soon as practicable, but in no event later than 120 days
after the close of each Partnership Year, the General Partner shall cause
to be mailed to each Record Holder of a Unit as of a date selected by the
General Partner in its sole discretion, an annual report containing
financial statements of the Partnership for such Partnership Year,
presented in accordance with generally accepted accounting principles,
including a balance sheet and statements of operations, Partners' equity
and cash flows, such statements to be audited by a firm of independent
public accountants selected by the General Partner.
(b) As soon as practicable, but in no event later than 90 days after
the close of each calendar quarter except the last calendar quarter of each
year, the General Partner shall cause to be mailed to each Record Holder of
a Unit, as of a date selected by the General Partner in its sole
discretion, a report containing unaudited financial statements of the
Partnership and such other information as may be required by applicable
law, regulation or rule of any National Securities Exchange on which the
Units are listed for trading, or as the General Partner determines to be
necessary or appropriate.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION OF TAX RETURNS. The General Partner shall arrange
for the preparation and timely filing of all returns of Partnership income,
gains, deductions, losses and other items required of the Partnership for
federal and state income tax purposes and shall use all reasonable efforts to
furnish, within 90 days of the close of each taxable year of the Partnership,
the tax information reasonably required by Unitholders for federal and state
income tax reporting purposes. The classification, realization and recognition
of income, gain, losses and deductions and other items shall be on the accrual
method of accounting for federal income tax purposes. The taxable year of the
Partnership shall be the calendar year.
9.2 TAX ELECTIONS. Except as otherwise provided herein, the General
Partner shall in its sole discretion, determine whether to make any available
election pursuant to the Code; PROVIDED, HOWEVER, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
discretion that such revocation is in the best interests of the Limited Partners
and Assignees.
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9.3 TAX CONTROVERSIES. Subject to the provisions hereof, the General
Partner is designated the Tax Matters Partner (as defined in Section 6231 of the
Code), and is authorized and required to represent the Partnership (at the
Partnership's expense) in connection with all examinations of the Partnership's
affairs by tax authorities, including, without limitation, resulting
administrative and judicial proceedings, and to expend Partnership funds for
professional services and costs associated therewith. Each Partner and Assignee
agrees to cooperate with the General Partner and to do or refrain from doing any
or all things reasonably required by the General Partner to conduct such
proceedings.
9.4 ORGANIZATIONAL EXPENSES. The Partnership shall elect to deduct
expenses, if any, incurred by it in organizing the Partnership ratably over a
60-month period as provided in Section 709 of the Code.
9.5 WITHHOLDING. Notwithstanding any other provision of this
Agreement, the General Partner is authorized to take any action that it
determines in its sole discretion to be necessary or appropriate to cause the
Partnership and any Subsidiary to comply with any withholding requirements
established under the Code or any other federal, state or local law, including,
without limitation, pursuant to Sections 1441, 1442, 1445 and 1446 of the Code.
To the extent that the Partnership is required to withhold and pay over to any
taxing authority any amount resulting from the allocation or distribution of
income to any Partner or Assignee (including, without limitation, by reason of
Section 1446 of the Code), the amount withheld shall be treated as a
distribution of cash for purposes of Section 4.6(a) in the amount of such
withholding from such Partner.
9.6 ENTITY-LEVEL TAXATION. If legislation is enacted which causes
the Partnership to become treated as an association taxable as a corporation for
federal income tax purposes, then with respect to any calendar quarter
thereafter the Minimum Quarterly Distribution, First Target Distribution or
Second Target Distribution, as the case may be, shall be equal to the product of
(i) each such distribution amount multiplied by (ii) 1 minus the sum of (x) the
effective federal income tax rate applicable to the Partnership (expressed as a
percentage) plus (y) the effective overall state and local income tax rate
applicable to the Partnership (expressed as a percentage), in each case, for the
taxable year in which such quarter occurs (after taking into account the benefit
of any deduction allowable for federal income tax purposes with respect to the
payment of state and local income taxes).
9.7 ENTITY-LEVEL DEFICIENCY COLLECTIONS. If the Partnership is
required by applicable law to pay any federal, state or local income tax on
behalf of, or withhold such amount with respect to, any Partner or Assignee or
any former Partner or Assignee (a) the General Partner shall cause the
Partnership to pay such tax on behalf of such Partner or Assignee or former
Partner or Assignee from the funds of the Partnership; (b) any amount so paid on
behalf of, or withheld with respect to, any Partner or Assignee shall be treated
as a distribution of cash to such Partner or Assignee for purposes of Section
4.6(a); and (c) to the extent any such Partner or Assignee (but not a former
Partner or Assignee) is not then entitled to such distribution under this
Agreement, the General Partner shall be authorized, without the approval of any
Partner or Assignee, to amend this Agreement insofar as is necessary to maintain
the
59
uniformity of intrinsic tax characteristics as to all Units and to make
subsequent adjustments to distributions in a manner which, in the reasonable
judgment of the General Partner, will make as little alteration as practicable
in the priority and amount of distributions otherwise applicable under this
Agreement, and will not otherwise alter the distributions to which Partners and
Assignees are entitled under this Agreement. If the Partnership is permitted
(but not required) by applicable law to pay any such tax on behalf of any
Partner or Assignee or former Partner or Assignee, the General Partner shall be
authorized (but not required) to cause the Partnership to pay such tax from the
funds of the Partnership and to take any action consistent with this Section
9.7. The General Partner shall be authorized (but not required) to take all
necessary or appropriate actions to collect all or any portion of a deficiency
in the payment of any such tax that relates to prior periods and that is
attributable to Persons who were Limited Partners or Assignees when such
deficiencies arose, from such Persons.
9.8 OPINIONS OF COUNSEL. Notwithstanding any other provision of this
Agreement, if the Partnership is taxable for federal income tax purposes as a
corporation or otherwise taxed for federal income tax purposes as an entity at
any time and, pursuant to the provisions of this Agreement, an Opinion of
Counsel would otherwise be required to the effect that an action will not cause
the Partnership to become so taxable as a corporation or other entity or to be
treated as an association taxable as a corporation, such requirement for an
Opinion of Counsel shall be deemed automatically waived.
ARTICLE X
CERTIFICATES
10.1 CERTIFICATES.
(a) Upon the Partnership's issuance of Common Units to any Person,
the Partnership shall issue one or more Certificates in the name of such
Person evidencing the number of such Units being so issued. Certificates
shall be executed on behalf of the Partnership by the General Partner. No
Class A Common Unit Certificate shall be valid for any purpose until it has
been countersigned by the Transfer Agent.
(b) Upon the Partnership's issuance of I-Units to any Person, or
upon an increase of the number of Outstanding I-Units, the General Partner
shall make an entry in the Partnership's I-Unit register reflecting such
issuance or increase, as the case may be, but no Certificates evidencing
the number of I-Units so issued or increased, as the case may be shall be
issued.
10.2 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The General Partner shall cause to be kept on behalf of the
Partnership a register (the "UNIT REGISTER") in which, subject to such
reasonable regulations as it may prescribe and subject to the provisions of
Section 10.2(b), the General Partner will provide for the registration and
the transfer of Class A Common Units. The Transfer Agent is hereby
appointed registrar and transfer agent for the purpose of registering and
transferring Class A Common Units as herein provided. The Partnership shall
not
60
recognize transfers of Certificates representing Class A Common Units
unless same are effected in the manner described in this Section 10.2. Upon
surrender for registration of transfer of any Class A Common Units
evidenced by a Certificate and subject to the provisions of Section
10.2(b), the General Partner on behalf of the Partnership will execute, and
the Transfer Agent will countersign and deliver, in the name of the holder
or the designated transferee or transferees, as required pursuant to the
holder's instructions, one or more new Certificates evidencing the same
aggregate number of Class A Common Units as was evidenced by the
Certificate so surrendered.
(b) Except as otherwise provided in Section 11.5, the Partnership
shall not recognize any transfer of Class A Common Units until the
Certificates evidencing such Units are surrendered for registration of
transfer and such Certificates are accompanied by a Transfer Application
duly executed by the transferee (or the transferee's attorney-in-fact duly
authorized in writing). No charge shall be imposed by the Partnership for
such transfer; PROVIDED, that, as a condition to the issuance of any new
Certificate under this Section 10.2, the General Partner may require the
payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed with respect thereto.
10.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
(a) If any mutilated Certificate is surrendered to the Transfer
Agent, the General Partner on behalf of the Partnership shall execute, and,
upon its request, the Transfer Agent shall countersign and deliver in
exchange therefor, a new Certificate evidencing the same number of Units as
the Certificate so surrendered.
(b) The General Partner on behalf of the Partnership shall execute,
and, upon its request, the Transfer Agent shall countersign and deliver a
new Certificate in place of any Certificate previously issued if the Record
Holder of the Certificate:
(i) makes proof by affidavit, in form and substance
satisfactory to the General Partner, that a previously issued
Certificate has been lost, destroyed or stolen;
(ii) requests the issuance of a new Certificate before the
Partnership has received notice that the Certificate has been acquired
by a purchaser for value in good faith and without notice of an
adverse claim;
(iii) if requested by the General Partner, delivers to the
Partnership such security or indemnity as may be required by the
General Partner, in form and substance satisfactory to the General
Partner, with surety or sureties and with fixed or open penalty as the
General Partner may direct, in its sole discretion, to indemnify the
Partnership, the General Partner and the Transfer Agent against any
claim that may be made on account of the alleged loss, destruction or
theft of the Certificate; and
61
(iv) satisfies any other reasonable requirements imposed by
the General Partner.
If a Limited Partner or Assignee fails to notify the Partnership within a
reasonable time after he has notice of the loss, destruction or theft of a
Certificate, and a transfer of the Units represented by the Certificate is
registered before the Partnership, the General Partner or the Transfer
Agent receives such notification, the Limited Partner or Assignee shall be
precluded from making any claim against the Partnership, the General
Partner or the Transfer Agent for such transfer or for a new Certificate.
(c) As a condition to the issuance of any Certificate under this
Section 10.3, the General Partner may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including, without
limitation, the fees and expenses of the Transfer Agent) connected
therewith.
10.4 RECORD HOLDER. In accordance with Section 10.2(b), the
Partnership shall be entitled to recognize the Record Holder as the Limited
Partner or Assignee with respect to any Units and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such Units on
the part of any other Person, whether or not the Partnership shall have actual
or other notice thereof, except as otherwise provided by law or any applicable
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading. Without limiting the foregoing, when
a Person (such as a broker, dealer, bank, trust company or clearing corporation
or an agent of any of the foregoing) is acting as nominee, agent or in some
other representative capacity for another Person in acquiring and/or holding
Units, as between the Partnership on the one hand and such other Persons on the
other hand, such representative Person (a) shall be the Limited Partner or
Assignee (as the case may be) of record and beneficially, (b) must execute and
deliver a Transfer Application and (c) shall be bound by this Agreement and
shall have the rights and obligations of a Limited Partner or Assignee (as the
case may be) hereunder and as provided for herein.
ARTICLE XI
TRANSFER OF INTERESTS
11.1 TRANSFER.
(a) The term "transfer," when used in this Article XI with respect
to a Partnership Interest, shall be deemed to refer to an appropriate
transaction by which the General Partner assigns its Partnership Interest
as General Partner to another Person or by which the holder of a Unit
assigns such Unit to another Person who is or becomes an Assignee and
includes a sale, assignment, gift, pledge, encumbrance, hypothecation,
mortgage, exchange or any other disposition by law or otherwise.
(b) No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article XI. Any transfer or
62
purported transfer of a Partnership Interest not made in accordance with
this Article XI shall be null and void.
11.2 TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) The General Partner may transfer all, but not less than all, of
its Partnership Interest as the General Partner to a single transferee if,
but only if, (i) at least 66 2/3% of the Outstanding Units (excluding for
purposes of such determination any Common Units held by the General Partner
and its Affiliates and the number of I-Units that equal the number of
Listed Shares and Voting Shares held by the General Partner and its
Affiliates) and a majority of the Outstanding I-Units voting as a separate
class (excluding for purposes of such determination the number of I-Units
that equal the number of Listed Shares and Voting Shares held by the
General Partner and its Affiliates) approve of such transfer and of the
admission of such transferee as General Partner, (ii) the transferee agrees
to assume the rights and duties of the General Partner and be bound by the
provisions of this Agreement and the Delegation of Control Agreement and
(iii) the Partnership receives an Opinion of Counsel that such transfer
would not result in the loss of limited liability of any Limited Partner or
of any limited partner or member of any Subsidiary or cause the Partnership
or any Subsidiary to be taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes.
(b) Neither Section 11.2(a) nor any other provision of this
Agreement shall be construed to prevent (and all Partners do hereby consent
to) (i) the transfer by the General Partner of all of its Partnership
Interest as a General Partner to an Affiliate or (ii) the transfer by the
General Partner of all its Partnership Interest as a General Partner upon
its merger or consolidation with or other combination into any other Person
or the transfer by it of all or substantially all of its assets to another
Person if, in the case of a transfer described in either clause (i) or (ii)
of this sentence, the rights and duties of the General Partner with respect
to the Partnership Interest so transferred are assumed by the transferee
and the transferee agrees to be bound by the provisions of this Agreement;
PROVIDED, that, in either such case, such transferee furnishes to the
Partnership an Opinion of Counsel that such merger, consolidation,
combination, transfer or assumption will not result in a loss of limited
liability of any Limited Partner or of any limited partner or member of any
Subsidiary or cause the Partnership or any Subsidiary to be taxable as a
corporation or otherwise taxed as an entity for federal income tax
purposes. In the case of a transfer pursuant to this Section 11.2(b), the
transferee or successor (as the case may be) shall be admitted to the
Partnership as the General Partner immediately prior to the transfer of the
Partnership Interest, and the business of the Partnership shall continue
without dissolution.
11.3 TRANSFER OF UNITS.
(a) Units may be transferred only in the manner described in Section
10.2. The transfer of any Units and the admission of any new Partner shall
not constitute an amendment to this Agreement.
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(b) Until admitted as a Substituted Limited Partner pursuant to
Article XII, the Record Holder of a Unit shall be an Assignee in respect of
such Unit. Limited Partners may include custodians, nominees or any other
individual or entity in its own or any representative capacity.
(c) Each distribution in respect of Units shall be paid by the
Partnership, directly or through the Transfer Agent or through any other
Person or agent, only to the Record Holders thereof as of the Record Date
set for the distribution. Such payment shall constitute full payment and
satisfaction of the Partnership's liability in respect of such payment,
regardless of any claim of any Person who may have an interest in such
payment by reason of an assignment or otherwise.
(d) A transferee who has completed and delivered a Transfer
Application shall be deemed to have (i) requested admission as a
Substituted Limited Partner, (ii) agreed to comply with and be bound by and
to have executed this Agreement, (iii) represented and warranted that such
transferee has the capacity and authority to enter into this Agreement,
(iv) made the powers of attorney set forth in this Agreement and (v) given
the consents and made the waivers contained in this Agreement.
11.4 RESTRICTIONS ON TRANSFERS. Notwithstanding the other provisions
of this Article XI, no transfer of any Unit or interest therein of any Limited
Partner or Assignee shall be made if such transfer would (a) violate the then
applicable federal or state securities laws or rules and regulations of the
Securities and Exchange Commission, any state securities commission or any other
governmental authorities with jurisdiction over such transfer, (b) cause the
Partnership to be taxable as a corporation or otherwise taxed as an entity for
federal income tax purposes or (c) affect the Partnership's existence or
qualification as a limited partnership under the Delaware Act.
11.5 CITIZENSHIP CERTIFICATES; NON-CITIZEN ASSIGNEES.
(a) If the Partnership or any Subsidiary is or becomes subject to
any federal, state or local law or regulation which, in the reasonable
determination of the General Partner, provides for the cancellation or
forfeiture of any property in which the Partnership or any Subsidiary has
an interest based on the nationality, citizenship or other status of a
Limited Partner or Assignee, the General Partner may request any Limited
Partner or Assignee to furnish to the General Partner, within 30 days after
receipt of such request, an executed Citizenship Certification or such
other information concerning his nationality, citizenship or other status
(or, if the Limited Partner or Assignee is a nominee holding for the
account of another Person, the nationality, citizenship or other status of
such Person) as the General Partner may request. If a Limited Partner or
Assignee fails to furnish to the General Partner within the aforementioned
30-day period such Citizenship Certification or other requested information
or if upon receipt of such Citizenship Certification or other requested
information the General Partner determines, with the advice of counsel,
that a Limited Partner or Assignee is not an Eligible Citizen, the Units
held by such Limited Partner or Assignee shall be subject to redemption in
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accordance with the provisions of Section 11.6. In addition, the General
Partner may require that the status of any such Limited Partner or Assignee
be changed to that of a Non-citizen Assignee, and, thereupon, the General
Partner shall be substituted for such Non-citizen Assignee as the Limited
Partner in respect of his Units.
(b) The General Partner shall, in exercising voting rights in
respect of Units held by it on behalf of Non-citizen Assignees, distribute
the votes in the same ratios as the votes of Limited Partners in respect of
Units of the same class other than those of Non-citizen Assignees are cast,
either for, against or abstaining as to the matter.
(c) Upon dissolution of the Partnership, a Non-citizen Assignee
shall have no right to receive a distribution in kind pursuant to Section
14.4 but shall be entitled to the cash equivalent thereof, and the General
Partner shall provide cash in exchange for an assignment of the Non-citizen
Assignee's share of the distribution in kind. Such payment and assignment
shall be treated for Partnership purposes as a purchase by the General
Partner from the Non-citizen Assignee of his Partnership Interest
(representing his right to receive his share of such distribution in kind).
(d) At any time after he can and does certify that he has become an
Eligible Citizen, a Non-citizen Assignee may, upon application to the
General Partner, request admission as a Substituted Limited Partner with
respect to any Units of such Non-citizen Assignee not redeemed pursuant to
Section 11.6, and upon the Non-citizen Assignee's admission pursuant to
Section 12.2 the General Partner shall cease to be deemed to be the Limited
Partner in respect of the Non-citizen Assignee's Units.
11.6 REDEMPTION OF INTERESTS.
(a) If at any time a Limited Partner or Assignee fails to furnish a
Citizenship Certification or other information requested within the 30-day
period specified in Section 11.5(a), or if upon receipt of such Citizenship
Certification or other information the General Partner determines, with the
advice of counsel, that a Limited Partner or Assignee is not an Eligible
Citizen, the Partnership may, unless the Limited Partner or Assignee
establishes to the satisfaction of the General Partner that such Limited
Partner or Assignee is an Eligible Citizen or has transferred his Units to
a Person who furnishes a Citizenship Certification to the General Partner
prior to the date fixed for redemption as provided below, redeem the
Partnership Interest of such Limited Partner or Assignee as follows:
(i) The General Partner shall, not later than the 30th day
before the date fixed for redemption, give notice of redemption to the
Limited Partner or Assignee, at his last address designated on the
records of the Partnership or the Transfer Agent, by registered or
certified mail, postage prepaid. The notice shall be deemed to have
been given when so mailed. The notice shall specify the Redeemable
Units, the date fixed for redemption, the place of payment, that
payment of the redemption price will be made upon surrender of the
Certificate evidencing the Redeemable Units and that on and after the
date fixed for
65
redemption no further allocations or distributions to which the
Limited Partner or Assignee would otherwise be entitled in respect of
the Redeemable Units will accrue or be made.
(ii) The aggregate redemption price for Redeemable Units shall
be an amount equal to the Current Market Price (the date of
determination of which shall be the date fixed for redemption) of
Units of the class to be so redeemed multiplied by the number of Units
of each such class included among the Redeemable Units. The redemption
price shall be paid, in the sole discretion of the General Partner, in
cash or by delivery of a promissory note of the Partnership in the
principal amount of the redemption price, bearing interest at the rate
of 10% annually and payable in three equal annual installments of
principal together with accrued interest, commencing one year after
the redemption date.
(iii) Upon surrender by or on behalf of the Limited Partner or
Assignee, at the place specified in the notice of redemption, of the
Certificate evidencing the Redeemable Units, duly endorsed in blank or
accompanied by an assignment duly executed in blank, the Limited
Partner or Assignee or his duly authorized representative shall be
entitled to receive the payment therefor.
(iv) After the redemption date, Redeemable Units shall no
longer constitute issued and Outstanding Units.
(b) The provisions of this Section 11.6 shall also be applicable to
Units held by a Limited Partner or Assignee as nominee of a Person
determined to be other than an Eligible Citizen.
(c) Nothing in this Section 11.6 shall prevent the recipient of a
notice of redemption from transferring his Units before the redemption date
if such transfer is otherwise permitted under this Agreement. Upon receipt
of notice of such a transfer, the General Partner shall withdraw the notice
of redemption; PROVIDED, that the transferee of such Units certifies in the
Transfer Application that he is an Eligible Citizen. If the transferee
fails to make such certification, such redemption shall be effected from
the transferee on the original redemption date.
(d) If the Partnership is or becomes subject to any federal, state
or local law or regulation which, in the reasonable determination of the
General Partner, provides for the cancellation or forfeiture of any
property in which the Partnership or any Subsidiary has an interest, based
on the nationality (or other status) of the General Partner, whether or not
in its capacity as such, the Partnership may, unless the General Partner
has furnished a Citizenship Certification or transferred its Partnership
Interest or Units to a Person who furnishes a Citizenship Certification
prior to the date fixed for redemption, redeem the Partnership Interest or
Interests of the General Partner in the Partnership, which redemption shall
also constitute redemption of the general partner interest of the general
partner of any Subsidiary. If such redemption includes a redemption of the
Combined Interest, the redemption price thereof shall be equal to the
aggregate sum of the Current
66
Market Price (the date of determination for which shall be the date fixed
for redemption) of each class of Units then Outstanding, in each such case
multiplied by the number of Units of such class into which the Combined
Interest would then be convertible under the terms of Section 13.3(b) if
the General Partner were to withdraw or be removed as the General Partner
(the date of determination for which shall be the date fixed for
redemption). The redemption price shall be paid in cash or by delivery of a
promissory note of the Partnership in the principal amount of the
redemption price, bearing interest at the rate of 10% annually and payable
in three equal annual installments of principal, together with accrued
interest, commencing one year after the redemption date.
ARTICLE XII
ADMISSION OF PARTNERS
12.1 INTENTIONALLY OMITTED.
12.2 ADMISSION OF SUBSTITUTED LIMITED PARTNERS. By transfer of a Unit
in accordance with Article XI, the transferor shall be deemed to have given the
transferee the right to seek admission as a Substituted Limited Partner subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Certificate shall, however, only have the authority to convey to
a purchaser or other transferee who does not execute and deliver a Transfer
Application (i) the right to negotiate such Certificate to a purchaser or other
transferee and (ii) the right to transfer the right to request admission as a
Substituted Limited Partner to such purchaser or other transferee in respect of
the transferred Units. Each transferee of a Unit (including, without limitation,
any nominee holder or an agent acquiring such Unit for the account of another
Person) who executes and delivers a Transfer Application shall, by virtue of
such execution and delivery, be an Assignee and be deemed to have applied to
become a Substituted Limited Partner with respect to the Units so transferred to
such Person. Such Assignee shall become a Substituted Limited Partner (i) at
such time as the General Partner consents thereto, which consent may be given or
withheld in the General Partner's sole discretion, and (ii) when any such
admission is shown on the books and records of the Partnership. If such consent
is withheld, such transferee shall be an Assignee. An Assignee shall have an
interest in the Partnership equivalent to that of a Limited Partner with respect
to allocations and distributions, including, without limitation, liquidating
distributions, of the Partnership. With respect to voting rights attributable to
Units that are held by Assignees, the General Partner shall be deemed to be the
Limited Partner with respect thereto and shall, in exercising the voting rights
in respect of such Units on any matter, vote such Units at the written direction
of the Assignee who is the Record Holder of such Units. If no such written
direction is received, such Units will not be voted. An Assignee shall have no
other rights of a Limited Partner.
12.3 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor General
Partner approved pursuant to Section 13.1 or the transferee of or successor to
all of the General Partner's Partnership Interest pursuant to Section 11.2 who
is proposed to be admitted as a successor General Partner shall be admitted to
the Partnership as the General Partner, effective immediately prior to the
withdrawal or removal of the General Partner pursuant to Section 13.1
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or the transfer of the General Partner's Partnership Interest pursuant to
Section 11.2; PROVIDED, HOWEVER, that no such successor shall be admitted to the
Partnership until such successor has complied with the terms of Sections
11.2(a)(ii) and 11.2(a)(iii). Any such successor shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
12.4 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person (other than the General Partner or a Substituted
Limited Partner) who makes a Capital Contribution to the Partnership in
accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all
of the terms and conditions of this Agreement, including, without
limitation, the power of attorney granted in Section 1.4, and (ii) such
other documents or instruments as may be required in the discretion of the
General Partner to effect such Person's admission as an Additional Limited
Partner.
(b) Notwithstanding anything to the contrary in this Section 12.4,
no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in
the General Partner's sole discretion. The admission of any Person as an
Additional Limited Partner shall become effective on the date upon which
the name of such Person is recorded on the books and records of the
Partnership, following the consent of the General Partner to such
admission.
12.5 AMENDMENT OF AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP.
To effect the admission to the Partnership of any Partner, the General Partner
shall take all steps necessary and appropriate under the Delaware Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement and, if required by law, to prepare and
file an amendment to the Certificate of Limited Partnership and may for this
purpose, among others, exercise the power of attorney granted pursuant to
Section 1.4.
ARTICLE XIII
WITHDRAWAL OR REMOVAL OF PARTNERS
13.1 WITHDRAWAL OF THE GENERAL PARTNER.
(a) The General Partner shall be deemed to have withdrawn from the
Partnership upon the occurrence of any one of the following events (each
such event herein referred to as an "EVENT OF WITHDRAWAL"):
(i) the General Partner voluntarily withdraws from the
Partnership by giving written notice to the other Partners;
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(ii) the General Partner transfers all of its rights as
General Partner pursuant to Section 11.2;
(iii) the General Partner is removed pursuant to Section 13.2;
(iv) the General Partner (A) makes a general assignment for
the benefit of creditors; (B) files a voluntary bankruptcy petition;
(C) files a petition or answer seeking for itself a reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any law; (D) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against the General Partner in a proceeding of the type
described in clauses (A)-(C) of this sentence; or (E) seeks, consents
to or acquiesces in the appointment of a trustee, receiver or
liquidator of the General Partner or of all or any substantial part of
its properties;
(v) a final and non-appealable judgment is entered by a court
with appropriate jurisdiction ruling that the General Partner is
bankrupt or insolvent, or a final and non-appealable order for relief
is entered by a court with appropriate jurisdiction against the
General Partner, in each case under any federal or state bankruptcy or
insolvency laws as now or hereafter in effect; or
(vi) a certificate of dissolution or its equivalent is filed
for the General Partner, or 90 days expire after the date of notice to
the General Partner of revocation of its charter without a
reinstatement of its charter, under the laws of its state of
incorporation.
In no event shall the Maximum Permitted Delegation pursuant to the
terms and conditions of the Delegation of Control Agreement and this
Agreement be deemed an Event of Withdrawal.
If an Event of Withdrawal specified in this Section 13.1(a)(iv), (v)
or (vi) occurs, the withdrawing General Partner shall give written notice
to the Limited Partners within 30 days after such occurrence. The Partners
hereby agree that only the Events of Withdrawal described in this Section
13.1 shall result in the withdrawal of the General Partner from the
Partnership.
(b) Withdrawal of the General Partner from the Partnership upon the
occurrence of an Event of Withdrawal will not constitute a breach of this
Agreement under the following circumstances: (i) at any time that the
General Partner voluntarily withdraws by giving at least 90 days' advance
notice to the Limited Partners, such withdrawal to take effect on the date
specified in such notice; or (ii) at any time that the General Partner
ceases to be a General Partner pursuant to Section 13.1(a)(ii) or is
removed pursuant to Section 13.2. If the General Partner gives a notice of
withdrawal pursuant to Section 13.1(a)(i), holders of at least a majority
of the Outstanding Units (excluding for purposes of such determination
Common Units held by the General Partner and its Affiliates and the number
of I-Units that equal the number of Listed
69
Shares and Voting Shares held by the General Partner and its Affiliates)
may, prior to the effective date of such withdrawal, elect a successor
General Partner. If, prior to the effective date of the General Partner's
withdrawal, a successor is not selected by the Limited Partners as provided
herein or the Partnership does not receive an Opinion of Counsel that
following the election of a successor General Partner, the General
Partner's withdrawal would not result in the loss of limited liability of
any Limited Partner or of any limited partner or member of any Subsidiary
or cause the Partnership or any Subsidiary to be taxable as a corporation
or otherwise taxed as an entity for federal tax purposes (a "WITHDRAWAL
OPINION OF COUNSEL"), the Partnership shall be dissolved in accordance with
Section 14.1. If a successor General Partner is elected and a Withdrawal
Opinion of Counsel is rendered, such successor shall be admitted (subject
to Section 12.3) immediately prior to the effective time of the withdrawal
or removal of the Departing Partner and shall continue the business of the
Partnership without dissolution.
13.2 REMOVAL OF THE GENERAL PARTNER. The General Partner may be
removed with or without Cause if such removal is approved by (i) at least
66 2/3% of the Outstanding Common Units voting as a separate class (excluding
for purposes of such determination Common Units held by the General Partner and
its Affiliates) and (ii) a majority of the Outstanding I-Units voting as a
separate class (excluding for purposes of such determination the number of
I-Units that equal the number of Listed Shares and Voting Shares held by the
General Partner and its Affiliates). Any such action by the Limited Partners for
removal of the General Partner must also provide for the election and succession
of a new General Partner. Such removal shall be effective immediately following
the admission of the successor General Partner pursuant to Article XII. The
right of the Limited Partners to remove the General Partner shall not exist or
be exercised unless the Partnership has received an Opinion of Counsel opining
as to the matters covered by a Withdrawal Opinion of Counsel.
13.3 INTEREST OF DEPARTING PARTNER AND SUCCESSOR GENERAL PARTNER.
(a) In the event of (i) withdrawal of the General Partner under
circumstances where such withdrawal does not violate this Agreement or (ii)
removal of the General Partner by the Limited Partners under circumstances
where Cause does not exist, the Departing Partner shall, at its option
exercisable prior to the effective date of the departure of such Departing
Partner, promptly receive from its successor in exchange for its
Partnership Interest as General Partner an amount in cash equal to the fair
market value of the Departing Partner's Partnership Interest as General
Partner, such amount to be determined and payable as of the effective date
of its departure. If the General Partner withdraws under circumstances
where such withdrawal violates this Agreement or if the General Partner is
removed by the Limited Partners under circumstances where Cause exists, the
General Partner's successor shall have the option described in the
immediately preceding sentence, and the Departing Partner shall not have
such option. In either event, the Departing Partner shall be entitled to
receive all reimbursements due such Departing Partner pursuant to Section
6.4, including, without limitation, any employee-related liabilities
(including, without limitation, severance liabilities), incurred in
connection with the termination of any employees employed by the General
Partner for the benefit of
70
the Partnership or any Subsidiary. Subject to Section 13.3(b), the
Departing Partner shall, as of the effective date of its departure, cease
to share in any allocations or distributions with respect to its
Partnership Interest as the General Partner and Partnership income, gain,
loss, deduction and credit will be prorated and allocated as set forth in
Section 5.2(g).
For purposes of this Section 13.3(a), the fair market value of the
Departing Partner's Partnership Interest as the general partner of the
Partnership herein (the "DEPARTING INTEREST") shall be determined by
agreement between the Departing Partner and its successor or, failing
agreement within 30 days after the effective date of such Departing
Partner's departure, by an independent investment banking firm or other
independent expert selected by the Departing Partner and its successor,
which, in turn, may rely on other experts and the determination of which
shall be conclusive as to such matter. If such parties cannot agree upon
one independent investment banking firm or other independent expert within
45 days after the effective date of such departure, then the Departing
Partner shall designate an independent investment banking firm or other
independent expert, the Departing Partner's successor shall designate an
independent investment banking firm or other independent expert, and such
firms or experts shall mutually select a third independent investment
banking firm or independent expert, which shall determine the fair market
value of the Departing Interest. In making its determination, such
independent investment banking firm or other independent expert shall
consider the then current trading price of Units on any National Securities
Exchange on which Units are then listed, the value of the Partnership's
assets, the rights and obligations of the General Partner and other factors
it may deem relevant.
(b) If the Departing Interest is not acquired in the manner set
forth in Section 13.3(a), the Departing Partner shall become a Limited
Partner and the Departing Interest shall be converted into Class A Common
Units pursuant to a valuation made by an investment banking firm or other
independent expert selected pursuant to Section 13.3(a), without reduction
in such Partnership Interest (but subject to proportionate dilution by
reason of the admission of its successor). Any successor General Partner
shall indemnify the Departing Partner as to all debts and liabilities of
the Partnership arising on or after the date on which the Departing Partner
becomes a Limited Partner. For purposes of this Agreement, conversion of
the General Partner's Partnership Interest to Class A Common Units will be
characterized as if the General Partner contributed its Partnership
Interest to the Partnership in exchange for the newly-issued Class A Common
Units.
(c) If the option described in Section 13.3(a) is not exercised by
the party entitled to do so, the successor General Partner shall, at the
effective date of its admission to the Partnership, contribute to the
capital of the Partnership cash in an amount such that its Capital Account,
after giving effect to such contribution and any adjustments made to the
Capital Accounts of all Partners pursuant to Section 4.6(d)(i), shall be
equal to that percentage of the Capital Accounts of all Partners that is
equal to its Percentage Interest as the General Partner. In such event,
each successor General Partner shall, subject to the following sentence, be
entitled to such Percentage Interest of all Partnership allocations
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and distributions and any other allocations and distributions to which the
Departing Partner was entitled. In addition, such successor General Partner
shall cause this Agreement to be amended to reflect that, from and after
the date of such successor General Partner's admission, the successor
General Partner's interest in all Partnership distributions and allocations
shall be 2%, and that of the holders of Outstanding Units shall be 98%.
13.4 INTENTIONALLY OMITTED.
13.5 WITHDRAWAL OF LIMITED PARTNERS. No Limited Partner shall have
any right to withdraw from the Partnership; PROVIDED, HOWEVER, that when a
transferee of a Limited Partner's Units becomes a Record Holder, such
transferring Limited Partner shall cease to be a Limited Partner with respect to
the Units so transferred.
ARTICLE XIV
DISSOLUTION AND LIQUIDATION
14.1 DISSOLUTION. The Partnership shall not be dissolved by the
admission of Substituted Limited Partners or Additional Limited Partners or by
the admission of a successor General Partner in accordance with the terms of
this Agreement. Upon the removal or withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs should be wound up, upon:
(a) the expiration of its term as provided in Section 1.5;
(b) an Event of Withdrawal of the General Partner as provided in
Section 13.1(a), unless a successor is named as provided in Section
13.1(b) or Section 13.2, as the case may be;
(c) an election to dissolve the Partnership by the General Partner
that is approved by at least 66 2/3% of the Outstanding Units (and all
Limited Partners hereby expressly consent that such approval may be
effected upon written consent of at least 66 2/3% of the Outstanding
Units);
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Delaware Act; or
(e) the sale of all or substantially all of the assets and
properties of the Partnership or Enbridge Energy, Limited Partnership.
14.2 CONTINUATION OF THE BUSINESS OF THE PARTNERSHIP AFTER
DISSOLUTION. Upon (i) dissolution of the Partnership following an Event of
Withdrawal caused by the withdrawal or removal of the General Partner and a
failure of the requisite number of Partners to appoint a successor General
Partner as provided in Section 13.1 or 13.2, as the case may be, then within an
additional 90 days or (ii) dissolution of the Partnership upon an event
constituting an Event of Withdrawal described in Section 13.1(a)(iv), then
within 180 days thereafter, at least a
72
majority of the Outstanding Units may elect to reconstitute the Partnership and
continue its business on the same terms and conditions set forth in this
Agreement by forming a new limited partnership on terms identical to those set
forth in this Agreement and having as a general partner a Person approved by the
holders of at least a majority of the Outstanding Units. Upon any such election
by the holders of at least a majority of the outstanding Units, all Partners
shall be bound thereby and shall be deemed to have approved thereof. Unless such
an election is made with the applicable time period as set forth above, the
Partnership shall conduct only activities necessary to wind up its affairs. If
such an election is so made, then:
(a) the reconstituted Partnership shall continue until the end of
the term set forth in Section 1.5 unless earlier dissolved in accordance
with this Article XIV;
(b) if the successor General Partner is not the former General
Partner, then the interest of the former General Partner shall be treated
thenceforth as the interest of a Limited Partner and converted into Class A
Common Units in the manner provided in Section 13.3(b); and
(c) all necessary steps shall be taken to cancel this Agreement and
the Certificate of Limited Partnership and to enter into and, as necessary,
to file a new partnership agreement and certificate of limited partnership,
and the successor general partner may for this purpose exercise the powers
of attorney granted the General Partner pursuant to Section 1.4; PROVIDED,
that the right of at least a majority of Outstanding Units to approve a
successor general partner and to reconstitute and to continue the business
of the Partnership shall not exist and may not be exercised unless the
Partnership has received an Opinion of Counsel that (x) the exercise of the
right would not result in the loss of limited liability of any Limited
Partner and (y) neither the Partnership, the reconstituted limited
partnership nor any Subsidiary would become taxable as a corporation or
otherwise be taxed as an entity for federal income tax purposes upon the
exercise of such right to continue.
14.3 LIQUIDATION. Upon dissolution of the Partnership, unless the
Partnership is continued under an election to reconstitute and continue the
Partnership pursuant to Section 14.2, the General Partner, or in the event the
General Partner has been dissolved or removed, become bankrupt as set forth in
Section 13.1 or withdrawn from the Partnership, a liquidator or liquidating
committee approved by at least 66 2/3% of the Outstanding Units, shall be the
Liquidator. The Liquidator (if other than the General Partner) shall be entitled
to receive such compensation for its services as may be approved by at least
66 2/3% of the Outstanding Units. The Liquidator shall agree not to resign at
any time without 15 days' prior written notice and (if other than the General
Partner) may be removed at any time, with or without Cause by notice of removal
approved by at least 66 2/3% of the Outstanding Units. Upon dissolution, removal
or resignation of the Liquidator, a successor and substitute Liquidator (who
shall have and succeed to all rights, powers and duties of the original
Liquidator) shall within 30 days thereafter be approved by at least 66 2/3% of
the Outstanding Units. The right to approve a successor or substitute Liquidator
in the manner provided herein shall be deemed to refer also to any such
successor or substitute Liquidator approved in the manner herein provided.
Except as expressly
73
provided in this Article XIV, the Liquidator approved in the manner provided
herein shall have and may exercise, without further authorization or consent of
any of the parties hereto, all of the powers conferred upon the General Partner
under the terms of this Agreement (but subject to all of the applicable
limitations, contractual and otherwise, upon the exercise of such powers, other
than the limitation on sale set forth in Section 6.3(b)) to the extent necessary
or desirable in the good faith judgment of the Liquidator to carry out the
duties and functions of the Liquidator hereunder for and during such period of
time as shall be reasonably required in the good faith judgment of the
Liquidator to complete the winding up and liquidation of the Partnership as
provided for herein. The Liquidator shall liquidate the assets of the
Partnership, and apply and distribute the proceeds of such liquidation in the
following order of priority, unless otherwise required by mandatory provisions
of applicable law:
(a) the payment to creditors of the Partnership, including, without
limitation, Partners who are creditors, in the order of priority provided
by law; and the creation of a reserve of cash or other assets of the
Partnership for contingent liabilities in an amount, if any, determined by
the Liquidator to be appropriate for such purposes;
(b) to all Partners in accordance with the positive balances in
their respective Capital Accounts after taking into account adjustments to
such Capital Accounts pursuant to Section 5.1(c); and
(c) to all Partners in accordance with their respective Percentage
Interests.
14.4 DISTRIBUTIONS IN KIND. Notwithstanding the provisions of Section
14.3, which require the liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its absolute discretion,
defer for a reasonable time the liquidation of any assets except those necessary
to satisfy liabilities of the Partnership (including, without limitation, those
to Partners as creditors) or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 14.3,
undivided interests in such Partnership assets as the Liquidator deems not
suitable for liquidation. Any such distributions in kind shall be made only if,
in the good faith judgment of the Liquidator, such distributions in kind are in
the best interest of the Limited Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as the
Liquidator deems reasonable and equitable and to any agreement governing the
operation of such properties at such time. The Liquidator shall determine the
fair market value of any property distributed in kind using such reasonable
method of valuation as it may adopt. Notwithstanding the foregoing, the
Liquidator may not make distributions in kind unless all of the Listed Shares
and Voting Shares are held by the General Partner and its Affiliates.
14.5 CANCELLATION OF CERTIFICATE OF LIMITED PARTNERSHIP. Upon the
completion of the distribution of Partnership cash and property as provided in
Sections 14.3 and 14.4, the Partnership shall be terminated and the Certificate
of Limited Partnership and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the
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State of Delaware shall be canceled and such other actions as may be necessary
to terminate the Partnership shall be taken.
14.6 REASONABLE TIME FOR WINDING UP. A reasonable time shall be
allowed for the orderly winding up of business and affairs of the Partnership
and the liquidation of its assets pursuant to Section 14.3 in order to minimize
any losses otherwise attendant upon such winding up, and the provisions of this
Agreement shall remain in effect between the Partners during the period of
liquidation.
14.7 RETURN OF CAPITAL. The General Partner shall not be personally
liable for the return of the Capital Contributions of the Limited Partners, or
any portion thereof, it being expressly understood that any such return shall be
made solely from Partnership assets.
14.8 CAPITAL ACCOUNT RESTORATION. No Limited Partner shall have any
obligation to restore any negative balance in its Capital Account upon
liquidation of the Partnership. The General Partner shall be obligated to
restore any negative balance in its Capital Account upon liquidation of its
interest in the Partnership by the end of the taxable year of the Partnership
during which such liquidation occurs, or, if later, within 90 days after the
date of such liquidation.
14.9 WAIVER OF PARTITION. Each Partner hereby waives any right to
partition of the Partnership property.
ARTICLE XV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE
15.1 AMENDMENT TO BE ADOPTED SOLELY BY GENERAL PARTNER. Each Limited
Partner agrees that the General Partner (pursuant to its powers of attorney from
the Limited Partners and Assignees), without the approval of any Limited Partner
or Assignee, may amend any provision of this Agreement, and execute, swear to,
acknowledge, deliver, file and record whatever documents may be required in
connection therewith, to reflect:
(a) a change in the name of the Partnership, the location of the
principal place of business of the Partnership, the registered agent of the
Partnership or the registered office of the Partnership;
(b) admission, substitution, withdrawal or removal of Partners in
accordance with this Agreement;
(c) a change that, in the sole discretion of the General Partner, is
reasonable and necessary or appropriate to qualify or continue the
qualification of the Partnership as a limited partnership or a partnership
in which the limited partners have limited liability under the laws of any
state or that is necessary or advisable in the opinion of the General
Partner to ensure that the Partnership will not be taxable as a corporation
or otherwise taxed as an entity for federal income tax purposes;
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(d) a change (i) that, in the sole discretion of the General
Partner, does not adversely affect the Limited Partners in any material
respect, (ii) that is necessary or appropriate to satisfy any requirements,
conditions, guidelines or interpretations contained in any opinion,
interpretative release, directive, order, ruling or regulation of any
federal or state agency or judicial authority or contained in any federal
or state agency or judicial authority or contained in any federal or state
statute (including, without limitation, the Delaware Act) or that is
necessary or appropriate to facilitate the trading of the Units (including,
without limitation, the division of Outstanding Units into different
classes to facilitate uniformity of tax consequences within such classes of
Units) or comply with any rule, regulation, interpretative release,
guideline or requirement of any National Securities Exchange on which the
Units are or will be listed for trading, compliance with any of which the
General Partner determines in its sole discretion to be in the best
interests of the Partnership and the Limited Partners or (iii) that is
required to effect the intent of the provisions of this Agreement or is
otherwise contemplated by this Agreement;
(e) an amendment that is necessary, in the Opinion of Counsel, to
prevent the Partnership or the General Partner or its directors or officers
from in any manner being subjected to the provisions of the Investment
Company Act of 1940, as amended, the Investment Advisers Act of 1940, as
amended, or "plan asset" regulations adopted under the Employee Retirement
Income Security Act of 1974, as amended, whether or not substantially
similar to plan asset regulations currently applied or proposed by the
United States Department of Labor;
(f) subject to the terms of Section 4.4, an amendment that the
General Partner determines in its sole discretion to be necessary or
appropriate in connection with the authorization for issuance of any class
or series of Units pursuant to Section 4.4;
(g) Intentionally Omitted;
(h) Intentionally Omitted;
(i) any amendment expressly permitted in this Agreement to be made
by the General Partner acting alone;
(j) an amendment effected, necessitated or contemplated by a Merger
Agreement approved in accordance with Section 16.3; or
(k) any other amendments substantially similar to the foregoing.
15.2 AMENDMENT PROCEDURES. Except as provided in Sections 15.1 and
15.3, all amendments to this Agreement shall be made in accordance with the
following requirements. Amendments to this Agreement may be proposed solely by
the General Partner. Each such proposal shall contain the text of the proposed
amendment. If an amendment is proposed, the General Partner shall seek the
written approval of the requisite percentage of Outstanding Units or call a
meeting of the Limited Partners to consider and vote on such proposed amendment.
A
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proposed amendment shall be effective upon its approval by the holders of at
least 66 2/3% of the Outstanding Units unless a greater or different percentage
is required under this Agreement. The General Partner shall notify all Record
Holders upon final adoption of any proposed amendment.
15.3 AMENDMENT REQUIREMENTS.
(a) Notwithstanding the provisions of Sections 15.1 and 15.2, no
provision of this Agreement that establishes a percentage of Outstanding
Units required to take any action shall be amended, altered, changed,
repealed or rescinded in any respect that would have the effect of reducing
such voting requirement unless such amendment is approved by the written
consent or the affirmative vote of Unitholders whose aggregate percentage
of Outstanding Units constitutes not less than the required percentage of
Outstanding Units sought to be reduced.
(b) Notwithstanding the provisions of Sections 15.1 and 15.2, no
amendment to this Agreement may (i) enlarge the obligations of any Limited
Partner without such Limited Partner's consent, which may be given or
withheld in its sole discretion, (ii) modify the amounts distributable to
the General Partner in respect of its general partner interest in the
Partnership or any Subsidiary or modify the amounts reimbursable or
otherwise payable to the General Partner or any of its Affiliates by the
Partnership, (iii) change Section 14.1(a) or (c), (iv) restrict in any way
any action by or rights of the General Partner as set forth in this
Agreement without the General Partner's consent (which may be given or
withheld in the sole discretion of the General Partner) or (v) change the
term of the Partnership or, except as set forth in Section 14.1(c), give
any Person the right to dissolve the Partnership.
(c) Except as otherwise provided, and without limitation of the
General Partner's authority to adopt amendments to this Agreement as
contemplated in Section 15.1, the General Partner may amend the Partnership
Agreement without the approval of Unitholders, except that any amendment
that would have a material adverse effect on the holders of any type or
class of Outstanding Units must be approved by the holders of not less than
66 2/3% of the Outstanding Units of such type or class.
(d) Notwithstanding any other provision of this Agreement, except
for amendments pursuant to Section 6.3 or 15.1, no amendments shall become
effective without the approval of the Record Holders of at least 95% of the
Units unless the Partnership obtains an Opinion of Counsel to the effect
that (i) such amendment will not cause the Partnership or Enbridge Energy,
Limited Partnership to be taxable as a corporation or otherwise taxed as an
entity for federal income tax purposes and (ii) such amendment will not
affect the limited liability of any Limited Partner or any limited partner
of Enbridge Energy, Limited Partnership under applicable law.
(e) This Section 15.3 shall only be amended with the approval of the
Record Holders of not less than 95% of the Outstanding Units.
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15.4 MEETINGS. All acts of Limited Partners to be taken hereunder
shall be taken in the manner provided in this Article XV. Meetings of the
Limited Partners may be called by the General Partner or by Limited Partners
holding 20% or more of the Outstanding Units of the class for which a meeting is
proposed. Limited Partners shall call a meeting by delivering to the General
Partner one or more requests in writing stating that the signing Limited
Partners wish to call a meeting and indicating the general or specific purposes
for which the meeting is to be called. Within 60 days after receipt of such a
call from Limited Partners or within such greater time as may be reasonably
necessary for the Partnership to comply with any statutes, rules, regulations,
listing agreements or similar requirements governing the holding of a meeting or
the solicitation of proxies for use at such a meeting, the General Partner shall
send a notice of the meeting to the Limited Partners either directly or
indirectly through the Transfer Agent. A meeting shall be held at a time and
place determined by the General Partner on a date not more than 60 days after
the mailing of notice of the meeting. Limited Partners shall not vote on matters
that would cause the Limited Partners to be deemed to be taking part in the
management and control of the business and affairs of the Partnership so as to
jeopardize the Limited Partners' limited liability under the Delaware Act or the
law of any other state in which the Partnership is qualified to do business.
15.5 NOTICE OF A MEETING. Notice of a meeting called pursuant to
Section 15.4 shall be given to the Record Holders in writing by mail or other
means of written communication in accordance with Section 18.1. The notice shall
be deemed to have been given at the time when deposited in the mail or sent by
other means of written communication.
15.6 RECORD DATE. For purposes of determining the Limited Partners
entitled to notice of or to vote at a meeting of the Limited Partners or to give
approvals without a meeting as provided in Section 15.11, the General Partner
may set a Record Date, which shall not be less than 10 nor more than 60 days
before (a) the date of the meeting (unless such requirement conflicts with any
rule, regulation, guideline or requirement of any National Securities Exchange
on which the Units are listed for trading, in which case the rule, regulation,
guideline or requirement of such exchange shall govern) or (b) in the event that
approvals are sought without a meeting, the date by which Limited Partners are
requested in writing by the General Partner to give such approvals.
15.7 ADJOURNMENT. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting and a new Record Date
need not be fixed, if the time and place thereof are announced at the meeting at
which the adjournment is taken, unless such adjournment shall be for more than
45 days. At the adjourned meeting, the Partnership may transact any business
which might have been transacted at the original meeting. If the adjournment is
for more than 45 days or if a new Record Date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given in accordance with
this Article XV.
15.8 WAIVER OF NOTICE; APPROVAL OF MEETING; APPROVAL OF MINUTES. The
transactions of any meeting of Limited Partners, however called and noticed, and
whenever held, shall be as valid as if had at a meeting duly held after regular
call and notice, if a quorum is present either in person or by proxy, and if,
either before or after the meeting, each of the
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Limited Partners entitled to vote, present in person or by proxy, signs a
written waiver of notice or an approval of the holding of the meeting or an
approval of the minutes thereof. All waivers and approvals shall be filed with
the Partnership records or made a part of the minutes of the meeting. Attendance
of a Limited Partner at a meeting shall constitute a waiver of notice of the
meeting, except when the Limited Partner disapproves, at the beginning of the
meeting, the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to disapprove the consideration of matters required to be included in
the notice of the meeting, but not so included, in either case if the
disapproval is expressly made at the meeting.
15.9 QUORUM. The holders of 66 2/3% of the Outstanding Units of the
class for which a meeting has been called represented in person or by proxy
shall constitute a quorum at a meeting of Limited Partners of such class unless
any such action by the Limited Partners requires approval by holders of a
majority in interest of such Units, in which case the quorum shall be a
majority. At any meeting of the Limited Partners duly called and held in
accordance with this Agreement at which a quorum is present, the act of Limited
Partners holding Outstanding Units that in the aggregate represent at least
66 2/3% of the Outstanding Units entitled to vote and be present in person or by
proxy at such meeting shall be deemed to constitute the act of all Limited
Partners, unless a greater or different percentage is required with respect to
such action under the provisions of this Agreement, in which case the act of the
Limited Partners holding Outstanding Units that in the aggregate represent at
least such greater or different percentage shall be required. The Limited
Partners present at a duly called or held meeting at which a quorum is present
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough Limited Partners to leave less than a quorum, if any action
taken (other than adjournment) is approved by the required percentage of
Outstanding Units specified in this Agreement. In the absence of a quorum, any
meeting of Limited Partners may be adjourned from time to time by the
affirmative vote of a majority of the Outstanding Units represented either in
person or by proxy, but no other business may be transacted, except as provided
in Section 15.7.
15.10 CONDUCT OF MEETING. The General Partner shall have full power
and authority concerning the manner of conducting any meeting of the Limited
Partners or solicitation of approvals in writing, including, without limitation,
the determination of Persons entitled to vote, the existence of a quorum, the
satisfaction of the requirements of Section 15.4, the conduct of voting, the
validity and effect of any proxies and the determination of any controversies,
votes or challenges arising in connection with or during the meeting or voting.
The General Partner shall designate a Person to serve as chairman of any meeting
and shall further designate a Person to take the minutes of any meeting, in
either case including, without limitation, a Partner or a director or officer of
the General Partner. All minutes shall be kept with the records of the
Partnership maintained by the General Partner. The General Partner may make such
other regulations consistent with applicable law and this Agreement as it may
deem advisable concerning the conduct of any meeting of the Limited Partners or
solicitation of approvals in writing, including, without limitation, regulations
in regard to the appointment of proxies, the appointment and duties of
inspectors of votes and approvals, the submission and
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examination of proxies and other evidence of the right to vote, and the
revocation of approvals in writing.
15.11 ACTION WITHOUT A MEETING. Any action that may be taken at a
meeting of the Limited Partners may be taken without a meeting if an approval in
writing setting forth the action so taken is signed by Limited Partners holding
not less than the minimum percentage of the Outstanding Units that would be
necessary to authorize to take such action at a meeting at which all the Limited
Partners were present and voted. Prompt notice of the taking of action without a
meeting shall be given to the Limited Partners who have not approved in writing.
The General Partner may specify that any written ballot submitted to Limited
Partners for the purpose of taking any action without a meeting shall be
returned to the Partnership within the time period, which shall be not less than
20 days, specified by the General Partner. If a ballot returned to the
Partnership does not vote all of the Units held by the Limited Partner, the
Partnership shall be deemed to have failed to receive a ballot for the Units
that were not voted. If approval of the taking of any action by the Limited
Partners is solicited by any Person other than by or on behalf of the General
Partner, the written approvals shall have no force and effect unless and until
(a) they are deposited with the Partnership in care of the General Partner, (b)
approvals sufficient to take the action proposed are dated as of a date not more
than 90 days prior to the date sufficient approvals are deposited with the
Partnership and (c) an Opinion of Counsel is delivered to the General Partner to
the effect that the exercise of such right and the action proposed to be taken
with respect to any particular matter (i) will not cause the Limited Partners to
be deemed to be taking part in the management and control of the business and
affairs of the Partnership so as to jeopardize the Limited Partners' limited
liability, (ii) will not jeopardize the status of the Partnership as a
partnership, or cause the Partnership to be taxable as a corporation or
otherwise taxed as an entity, under applicable tax laws and regulations and
(iii) is otherwise permissible under the state statutes then governing the
rights, duties and liabilities of the Partnership and the Partners.
15.12 VOTING AND OTHER RIGHTS.
(a) Only those Record Holders of Units on the Record Date set
pursuant to Section 15.6 shall be entitled to notice of, and to vote at, a
meeting of Limited Partners or to act with respect to matters as to which
holders of the Outstanding Units have the right to vote or to act. All
references in this Agreement to votes of, or other acts that may be taken
by, the holders of Outstanding Units shall be deemed to be references to
the votes or acts of the Record Holders of such Outstanding Units.
(b) With respect to Units that are held for a Person's account by
another Person (such as a broker, dealer, bank, trust company or clearing
corporation, or an agent of any of the foregoing), in whose name such Units
are registered, such broker, dealer or other agent shall, in exercising the
voting rights in respect of such Units on any matter, and unless the
arrangement between such Persons provides otherwise, vote such Units in
favor of, and at the direction of, the Person who is the beneficial owner,
and the Partnership shall be entitled to assume it is so acting without
further inquiry. The
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provisions of this Section 15.12(b) (as well as all other provisions of
this Agreement) are subject to the provisions of Section 10.4.
ARTICLE XVI
MERGER
16.1 AUTHORITY. Subject to Section 5.10(d) and (e), the Partnership
may merge or consolidate with one or more corporations, limited liability
companies, business trusts or associations, real estate investment trusts,
common law trusts or unincorporated businesses, including, without limitation, a
general partnership or limited partnership, formed under the laws of the State
of Delaware or any other state of the United States of America, pursuant to a
written agreement of merger or consolidation (a "MERGER AGREEMENT") in
accordance with this Article.
16.2 PROCEDURE FOR MERGER OR CONSOLIDATION. Merger or consolidation
of the Partnership pursuant to this Article XVI requires the prior approval of
the General Partner. If the General Partner shall determine, in the exercise of
its sole discretion, to consent to the merger or consolidation, the General
Partner shall approve the Merger Agreement, which shall set forth:
(a) the names and jurisdictions of formation or organization of each
of the business entities proposing to merge or consolidate;
(b) the name and jurisdictions of formation or organization of the
business entity that is to survive the proposed merger or consolidation
(hereafter designated as the "SURVIVING BUSINESS ENTITY");
(c) the terms and conditions of the proposed merger or
consolidation;
(d) the manner and basis of exchanging or converting the equity
securities of each constituent business entity for, or into, cash, property
or general or limited partnership interests, rights, securities or
obligations of the Surviving Business Entity and (i) if any general or
limited partnership interests, securities or rights of any constituent
business entity are not to be exchanged or converted solely for, or into,
cash, property or general or limited partnership interests, rights,
securities or obligations of the Surviving Business Entity, the cash,
property or general or limited partnership interests, rights, securities or
obligations of any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity) which the holders of such
general or limited partnership interest are to receive in exchange for, or
upon conversion of their securities or rights, and (ii) in the case of
securities represented by certificates, upon the surrender of such
certificates, which cash, property or general or limited partnership
interests, rights, securities or obligations of the Surviving Business
Entity or any limited partnership, corporation, trust or other entity
(other than the Surviving Business Entity), or evidences thereof, are to be
delivered;
(e) a statement of any amendments or other changes in the
constituent documents (the articles or certificate of incorporation,
articles of trust, declaration of trust, certificate or agreement of
limited partnership or other similar charter or governing
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document), or the adoption of new constituent documents, in either case as
contemplated in Section 17-211(g) of the Delaware Act, of the Surviving
Business Entity to be effected by such merger or consolidation;
(f) the effective time of the merger, which may be the date of the
filing of the certificate of merger pursuant to Section 16.4 or a later
date specified in or determinable in accordance with the Merger Agreement;
PROVIDED, that if the effective time of the merger is to be later than the
date of the filing of the certificate of merger, it shall be fixed no later
than the time of the filing of the certificate of merger and stated
therein; and
(g) such other provisions with respect to the proposed merger or
consolidation as are deemed necessary or appropriate by the General
Partner.
16.3 APPROVAL BY LIMITED PARTNERS OF MERGER OR CONSOLIDATION.
(a) The General Partner of the Partnership, upon its approval of the
Merger Agreement, shall direct that the Merger Agreement be submitted to a
vote of Limited Partners whether at a meeting or by written consent, in
either case in accordance with the requirements of Article XV. A copy or a
summary of the Merger Agreement shall be included in or enclosed with the
notice of a meeting or the written consent.
(b) The Merger Agreement shall be approved upon receiving the
affirmative vote or consent of the holders of at least 66 2/3% of the
Outstanding Units, unless the Merger Agreement contains any provision
which, if contained in an amendment to this Agreement, the provisions of
this Agreement or the Delaware Act would require the vote or consent of a
greater percentage of the Outstanding Units of the Limited Partners or of
any class of Limited Partners, in which case such greater percentage vote
or consent shall be required for approval of the Merger Agreement.
(c) After such approval by vote or consent of the Limited Partners,
and at any time prior to the filing of the certificate of merger pursuant
to Section 16.4, the merger or consolidation may be abandoned pursuant to
provisions therefor, if any, set forth in the Merger Agreement.
16.4 CERTIFICATE OF MERGER. Upon the required approval by the General
Partner and Limited Partners of a Merger Agreement, a certificate of merger
shall be executed and filed with the Secretary of State of the State of Delaware
in conformity with the requirements of the Delaware Act.
16.5 EFFECT OF MERGER.
(a) Upon the effective date of the certificate of merger:
(i) all of the rights, privileges and powers of each of the
business entities that has merged or consolidated, and all property
(real, personal and mixed) and all debts due to any of those business
entities and all other things and
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causes of action belonging to each of those business entities shall be
vested in the Surviving Business Entity and, after the merger or
consolidation, shall be the property of the Surviving Business Entity
to the extent they were part of each constituent business entity;
(ii) the title to any real property vested by deed or
otherwise in any of those constituent business entities shall not
revert and shall not be in any way impaired because of the merger or
consolidation;
(iii) all rights of creditors and all liens on or security
interest in property of any of those constituent business entities
shall be preserved unimpaired; and
(iv) all debts, liabilities and duties of those constituent
business entities shall attach to the Surviving Business Entity, and
may be enforced against it to the same extent as if the debts,
liabilities and duties had been incurred or contracted by it.
(b) A merger or consolidation effected pursuant to this Article XVI
shall not be deemed to result in a transfer or assignment of assets or
liabilities from one entity to another having occurred.
16.6 MERGER WITH EEM UPON TAX STATUS EVENT.
(a) Subject to Section 16.3, upon or at any time following the
occurrence of a Tax Status Event, if the Record Holders of a majority of
Voting Shares determine to exercise their right to merge EEM with or into
the Partnership or any Subsidiary, the General Partner shall cause the
Partnership or such Subsidiary to merge with or into EEM in accordance with
the provisions of this Section 16.6.
(b) If the Record Holders of a majority of Voting Shares determine
to exercise their right to cause a merger as described in Section 7.03(a)
of the LLC Agreement, the General Partner shall execute and deliver or
cause to be executed and delivered the Merger Agreement and shall execute,
deliver and/or file or cause to be executed, delivered and/or filed,
pursuant to the Delaware Act or other applicable law, all other documents,
instruments or certificates deemed by it necessary or appropriate to
effectuate such merger and, subject to Section 16.6(c), such merger shall
have the effects provided in the Certificate of Merger, the Merger
Agreement and under the Delaware Act and any other applicable law.
(c) The Merger Agreement executed in connection with any merger of
EEM pursuant to this Section 16.6 shall provide that, at the effective time
of such merger, each Record Holder of Company Securities, in exchange for
the total number of Company Securities held by such Record Holder shall
receive, and the Partnership shall issue or pay to such Record Holder, as
applicable, a number of whole Class A Common Units and an amount of cash in
lieu of fractional Class A Common Units such that (i) the product of the
number of whole Class A Common Units so received by such Record Holder and
the
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average Closing Price of one Class A Common Unit for the 10 consecutive
Trading Day period ending on the fifth Trading Day prior to the effective
time of such merger, plus (ii) the amount of cash received by such Record
Holder, is equal to the product of the number of Company Securities held by
such Record Holder and the average Closing Price of one Listed Share for
the 10 consecutive Trading Day period ending on the fifth Trading Day prior
to the effective time of such merger. For purposes of this Section 16.6(c),
the term "Class A Common Units" shall include any other security issued by
the Partnership in exchange for Company Securities in lieu of Class A
Common Units that is in all respects substantially similar to Class A
Common Units.
ARTICLE XVII
RIGHT TO ACQUIRE UNITS
17.1 RIGHT TO ACQUIRE UNITS.
(a) Notwithstanding any provision of this Agreement, if at any time
less than 15% of the aggregate number of Listed Shares then Outstanding (as
defined in the LLC Agreement) plus the aggregate number of Common Units
then Outstanding are held by Persons other than the General Partner, the
Purchaser and their respective Affiliates, the General Partner shall have
the right (which right it may assign and transfer to the Partnership or any
Affiliate of the General Partner), exercisable in its sole discretion, to
purchase all, but not less than all, of the Common Units then Outstanding
held by Persons other than the General Partner and its Affiliates, at the
Optional Purchase Price, but only if the Purchaser elects to purchase all,
but not less than all, of the outstanding Listed Shares that are not held
by the Purchaser and its Affiliates pursuant to Article 4 of the Purchase
Provisions. As used in this Agreement, "OPTIONAL PURCHASE PRICE" means a
price that is equal to the greatest of (i) the Current Market Price for the
Common Units as of the date five days prior to the date that the Notice of
Election to Purchase is delivered to the Transfer Agent for mailing to the
Record Holders of Common Units, (ii) the highest price paid by the General
Partner or any of its Affiliates for a Common Unit purchased during the 90
calendar day period ending on the day prior to the date that the Notice of
Election to Purchase is delivered to the Transfer Agent for mailing to the
Record Holders of Common Units, (iii) the Current Market Price for the
Listed Shares as of the date five days prior to the date that the Notice of
Election to Purchase is delivered to the Transfer Agent for mailing to the
Record Holders of Common Units, and (iv) the highest price paid by the
General Partner or any of its Affiliates for a Listed Share purchased
during the 90 calendar day period ending on the day prior to the date that
the Notice of Election to Purchase is delivered to the Transfer Agent for
mailing to the Record Holders of Common Units. To the extent that the price
paid for Listed Shares or Common Units in clauses (ii) or (iv) is paid in
securities, the value of such securities shall be the Closing Price for
such securities on the day the purchase of the Listed Shares or Common
Units is effected. To the extent that the price paid for Listed Shares or
Common Units in clauses (ii) or (iv) is paid other than in cash or
securities, the value of such other consideration (and therefore the price
paid for such Listed Shares or Common Units) shall be determined in good
faith by the Board of Directors of the General Partner.
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(b) As used in this Agreement, (i) "CURRENT MARKET PRICE" of a
security listed or admitted to trading on any National Securities Exchange
means the average of the daily Closing Prices for such security for the 20
consecutive Trading Days immediately prior to, but not including such date;
(ii) "CLOSING PRICE" for any day means (A) the last sale price on such day,
regular way, or in case no such sale takes place on such day, the average
of the closing bid and asked prices on such day, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, (B) if such securities are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed
on the principal National Securities Exchange on which such securities are
listed or admitted to trading or, if such securities are not listed or
admitted to trading on any National Securities Exchange, the last quoted
price on such day or, (C) if not so quoted, the average of the high bid and
low asked prices on such day in the over-the-counter market, as reported by
the National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or (D) if on any such day such
securities are not quoted by any such organization, the average of the
closing bid and asked price on such day as furnished by a professional
market maker making a market in such securities selected by the Board of
Directors of the General Partner, or (E) if on any such day no market maker
is making a market in such securities, the fair value of such securities on
such day as determined reasonably and in good faith by the Board of
Directors of the General Partner; and (iii) "TRADING DAY" means a day on
which the principal National Securities Exchange on which such securities
are listed or admitted to trading is open for the transaction of business
or, if such securities are not listed or admitted to trading on any
National Securities Exchange, a day on which banking institutions in New
York City generally are open. Notwithstanding anything herein to the
contrary, the Current Market Price of one Class B Common Unit shall be
deemed to be the same as the Current Market Price of one Class A Common
Unit.
(c) If the General Partner, any Affiliate of the General Partner or
the Partnership elects to exercise the right to purchase Common Units
granted pursuant to Section 17.1(a), the General Partner shall deliver to
the Transfer Agent written notice of such election to purchase (the "NOTICE
OF ELECTION TO PURCHASE") and shall cause the Transfer Agent to mail a copy
of such Notice of Election to Purchase to the Record Holders of Common
Units (as of a Record Date selected by the General Partner) at least 10,
but not more than 60 days prior to the Purchase Date. Such Notice of
Election to Purchase shall also be published in daily newspapers of general
circulation printed in the English language and published in the Borough of
Manhattan, New York. The Notice of Election to Purchase shall specify the
Purchase Date and the Optional Purchase Price and state that the General
Partner, its Affiliate or the Partnership, as the case may be, elects to
purchase such Common Units, upon surrender of Certificates representing
such Common Units in exchange for payment, at such office or offices of the
Transfer Agent as the Transfer Agent may specify, or as may be required by
any National Securities Exchange on which the Common Units are listed or
admitted to trading. Any such Notice of Election to Purchase mailed to a
Record Holder of Common Units at his address as
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reflected in the records of the Transfer Agent shall be conclusively
presumed to have been given whether or not the holder receives such notice.
On or prior to the Purchase Date, the General Partner, its Affiliate or the
Partnership, as the case may be, shall deposit with the Transfer Agent cash
in an amount sufficient to pay the aggregate Optional Purchase Price for
all of the Common Units to be purchased in accordance with this Section
17.1. If the Notice of Election to Purchase shall have been duly given as
aforesaid at least 10 days prior to the Purchase Date, and if on or prior
to the Purchase Date the deposit described in the preceding sentence has
been made for the benefit of the holders of Common Units subject to
purchase as provided herein, then from and after the Purchase Date,
notwithstanding that any Certificate shall not have been surrendered for
purchase, all rights of the holders of such Common Units (including,
without limitation, any rights pursuant to Articles IV, V and XIV) shall
thereupon cease, except the right to receive the Optional Purchase Price
for the Common Units, without interest, upon surrender to the Transfer
Agent of the Certificates representing such Common Units, and such Common
Units shall thereupon be deemed to be transferred to the General Partner,
its Affiliate or the Partnership, as the case may be, on the record books
of the Transfer Agent and the Partnership, and the General Partner, its
Affiliate or the Partnership, as the case may be, shall be deemed to be the
holder of all such Common Units from and after the Purchase Date and shall
have all rights as the holder of such Common Units (including, without
limitation, all rights as holder pursuant to Articles IV, V and XIV).
(d) At any time from and after the Purchase Date, a holder of an
Outstanding Common Unit subject to purchase as provided in this Section
17.1 may surrender his Certificate, as the case may be, evidencing such
Common Unit to the Transfer Agent in exchange for payment of the Optional
Purchase Price, therefor without interest thereon.
ARTICLE XVIII
GENERAL PROVISIONS
18.1 ADDRESSES AND NOTICES. Any notice, demand, request or report
required or permitted to be given or made to a Partner or Assignee under this
Agreement shall be in writing and shall be deemed given or made when delivered
in person or when sent by first-class United States mail or by other means of
written communication to the Partner or Assignee at the address described below.
Any notice, payment or report to be given or made to a Partner or Assignee
hereunder shall be deemed conclusively to have been given or made, and the
obligation to give such notice or report or to make such payment shall be deemed
conclusively to have been fully satisfied, upon sending of such notice, payment
or report to the Record Holder of such Unit at his address as shown on the
records of the Transfer Agent or as otherwise shown on the records of the
Partnership, regardless of any claim of any Person who may have an interest in
such Unit or the Partnership Interest of a General Partner by reason of any
assignment or otherwise. An affidavit or certificate of making of any notice,
payment or report in accordance with the provisions of this Section 18.1
executed by the General Partner, the Transfer Agent or the mailing organization
shall be prima facie evidence of the giving or making of such notice, payment or
report. If any notice, payment or report addressed to a Record Holder at the
address of such Record Holder appearing on the books and records of the Transfer
Agent or the
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Partnership is returned by the United States Post Office marked to indicate that
the United States Postal Service is unable to deliver it, such notice, payment
or report and any subsequent notices, payments and reports shall be deemed to
have been duly given or made without further mailing (until such time as such
Record Holder or another Person notifies the Transfer Agent or the Partnership
of a change in his address) if they are available for the Partner or Assignee at
the principal office of the Partnership for a period of one year from the date
of the giving or making of such notice, payment or report to the other Partners
and Assignees. Any notice to the Partnership shall be deemed given if received
by the General Partner at the principal office of the Partnership designated
pursuant to Section 1.3. The General Partner may rely and shall be protected in
relying on any notice or other document from a Partner, Assignee or other Person
if believed by it to be genuine.
18.2 TITLES AND CAPTIONS. All article or section titles or captions
in this Agreement are for convenience only. They shall not be deemed part of
this Agreement and in no way define, limit, extend or describe the scope or
intent of any provisions hereof. Except as specifically provided otherwise,
references to "Articles" and "Sections" are to Articles and Sections of this
Agreement.
18.3 PRONOUNS AND PLURALS. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice-versa.
18.4 FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
18.5 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
18.6 INTEGRATION. This Agreement constitutes the entire agreement
among the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements and understandings pertaining thereto.
18.7 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of, or shall be enforceable by, any creditor of the Partnership.
18.8 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
18.9 COUNTERPARTS. This Agreement may be executed in counterparts,
all of which together shall constitute an agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Agreement immediately upon affixing its signature hereto or, in the case
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of a Person acquiring a Unit, upon executing and delivering a Transfer
Application as herein described, independently of the signature of any other
party.
18.10 APPLICABLE LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
18.11 INVALIDITY OF PROVISIONS. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not be affected thereby.
18.12 AMENDMENTS TO REFLECT GP REORGANIZATION AGREEMENT. In addition
to the amendments to this Agreement contained in the GP Reorganization Agreement
and notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall be deemed to be further amended and modified to the extent
necessary, but only to the extent necessary, to carry out the purposes and
intent of the GP Reorganization Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GENERAL PARTNER:
ENBRIDGE ENERGY COMPANY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
President
LIMITED PARTNERS:
All Limited Partners now and hereafter
admitted as limited partners of the
Partnership, pursuant to Powers of
Attorney now and hereafter executed in
favor of, and granted and delivered to,
the General Partner.
By: Enbridge Energy Company, Inc.,
General Partner, as
attorney-in-fact for all Limited
Partners pursuant to the Powers of
Attorney granted pursuant to
Section 1.4.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
President
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